The 6 Stages of Bankruptcy

June 27, 2020

While most people know that bankruptcy is a way to discharge or eliminate debt, few know how it happens.

Not knowing what to expect during the bankruptcy process can make the idea more intimidating than it need be. In reality, the filing for bankruptcy protection is not overly burdensome, but it does require you to gather paperwork as detailed on the Office Consultation link of my web page. So long as you provide the required documents to me and to the bankruptcy trustee, your case will be smooth for you. And with help from me, you can usually go through the whole process with ease.

How Long Does Bankruptcy Take?

The bankruptcy process usually lasts about three to four months from start to finish for Chapter 7 filings. Chapter 13 takes the same amount of time to file and go through the initial phases, but because you pay down some or all of your debts over time, the payment plan will last three to five years.

At the end of either bankruptcy filing, most of your debts will be discharged and you will be free of the bankruptcy court. Some debts, such as student loans, some taxes and family support arrears might still be owed after a Chapter 7. Student loans might still be owed after a Chapter 13. In addition, secured debts for property you might wish to retain, may still be owed.

The Six Steps in a Bankruptcy Process

There are six steps to a bankruptcy. While certain bankruptcies will be more complex than others, we will work through the stages until your debts are formally discharged.

Step 1: Pre-Bankruptcy Counseling

Before filing for bankruptcy, you must take an online government-approved credit counseling class. I can suggest a counseling class.

Step 2: Filing the Bankruptcy Petition

The bankruptcy petition is the most complicated part of this process. The petition is an intricate document that describes and categorizes all of your outstanding debts using a strict format.

I will create this document for you after you fill out a questionnaire about your financial situation and looking over your financial documents.

Once I collect the information and draft the document, we formally file the petition with the courts. This officially starts the bankruptcy time line.

If you are filing a Chapter 13, we will also file a proposed plan indicating the monthly payment to the trustee and the debts that will be paid by the trustee.

Step 3: Automatic Stay

As soon as you file for bankruptcy, the court will issue an automatic stay. The automatic stay is a court order that prohibits your creditors from contacting you to collect on your debts and it stops any legal proceedings against you.

To do this, the bankruptcy court sends out a Notice of Filing and a Notice of Stay to your creditors. This makes it illegal for your creditors to continue trying to collect on your debts and stops any collection proceedings, like lawsuits.

During the automatic stay, your creditors may only contact your lawyer, and all the calls should stop.

Step 4: Creditor's Meeting

About a four to six weeks after filing for bankruptcy, we will attend a creditor’s meeting with your bankruptcy trustee. Generally, this meeting lasts less than an hour. Creditors may attend to ask you questions regarding your finances, but this is very rare. Usually, the trustee will ask you questions regarding your employment and finances.

Step 5: Debtor Education Course

Before the bankruptcy is finalized, you must complete a government-approved debtor education course. This course is completed online and it takes an average of two hours to complete.

During the Debtor Education course, you will be taught how to create a budget, manage money wisely, and use credit appropriately.

Step 6: Notice of Discharge

After you finish all of this, most of your debts will be discharged and you will be free of the bankruptcy court. Some debts, such as student loans, some taxes and family support arrears might still be owed after a Chapter 7. Student loans might still be owed after a Chapter 13. In addition, secured debts for property you might wish to retain, may still be owed.

In a Chapter 7 petition, you are usually discharged after 60 days following the initially scheduled meeting of creditors. In a Chapter 13, this happens after you finish the agreed-upon payment plan. In either case, you will receive a Notice of Discharge.

Although many people believe that filing for bankruptcy is a long, difficult process, it generally is not. As you can see, there are only a few basic steps you need to go through. With my help, it becomes simple for anyone.

Law Office of Barry H. Spitzer

I have been practicing bankruptcy law since 1992. I have successfully represented debtors, creditors and Chapter 7 trustees through the bankruptcy process. By representing all sides of bankruptcy cases, I have a unique prospective on how I can best assist you.
980 9th Street, Ste 380
Sacramento, CA 95814
(916) 442-9002
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