Chapter 7 Bankruptcy Process – How The Process Works

The Chapter 7 Bankruptcy process will consume four to six months of your life, but there is light at the end of the tunnel. If your case is successful, all or almost all of your debt will be discharged. While you can complete a bankruptcy on your own, it is not advised. You should always hire a bankruptcy attorney so you know that you are meeting all deadlines and filing the correct forms.

Prior to your bankruptcy court date, you will need to attend credit counseling with an agency that has the U.S. Trustee’s Office approval. A list of such agencies can be found on this office’s website. This step cannot be skipped, as it will result in your bankruptcy case being dismissed.

Chapter 7 is initiated with the filing of several forms consisting of: a petition, financial schedules, forms listing income and expenses, and property exemption forms. These forms need to be complete and accurate. An automatic stay is now in effect, keeping credit collectors at bay while your case is in progress.

Next, the court assigns a trustee to serve as a facilitator for your case. This person will review your paperwork and if you have any non-exempt property, will be the one who takes it to your creditors for distribution.

You will then receive a notice regarding a Meeting of Creditors which you will need to attend. At this meeting you will be placed under oath and your trustee and any creditors in attendance will ask you questions regarding your finances and debt.

After the conclusion of this meeting the court will make a decision on whether or not you are eligible for Chapter 7. If you are determined to be eligible your trustee will evaluate your non-exempt property to decide if it should be seized and sold. If sold, the proceeds from this will go to your creditors to eliminate or reduce your liability.

Following the handling of the non-exempt property, your secured debts are then examined. You will have three options to choose from: reaffirm the debt, return the property, or pay it off. If you wish to reaffirm the debt and you do not have legal representation a reaffirmation hearing will have to take place before a judge.

You are now one step away from having your debt discharged. You will now need to take a financial management course. This course is not optional and the credit counseling you received prior to filing for Chapter 7 bankruptcy does not count toward this requirement. After you have completed your course Form 23 is filed with the court, certifying your completion.


Finally, the end of the journey has arrived. Your bankruptcy discharge will be sent to you via postal mail. Your case will be officially closed within a few days to a few weeks after you receive your discharge. You can now resume your life with a clean slate and the opportunity to rebuild your credit.