View RSS Feed

Legal Help

Chapter 7 and Chapter 13 Bankruptcy Process

Rate this Entry
by , 08-08-2011 at 08:51 PM (1250 Views)
Chapter 7 Bankruptcy Process:

Chapter 7 bankruptcy can be initiated either voluntarily (filed by debtor) or involuntarily (filed by creditor). Once a petition is filed in the appropriate Bankruptcy Court, most collection actions against the debtor are automatically stayed (stopped). A trustee is then appointed to supervise the bankruptcy proceeding. One to two months after filing, a meeting of the creditors is held to determine eligibility and meet with the debtor to ensure the debtor wants to go through with the proceeding. If a debtor qualifies for Chapter 7, the trustee assemble and liquidate the debtor's non-exempt property. In most Chapter 7 cases, there is no non-exempt property to assemble and liquidate. Whatever assets that the trustee can obtain from the sale of non-exempt property is used to pay creditors. The debtor must complete an approved debtor education course within 45 days of the meeting of the creditors. The debtor will usually be discharged from most, if not all debts relatively soon after filing (as early as 3 months) so long as a interested party does not file an objection to discharge.

How long does the bankruptcy process take before debts are discharged?

For Chapter 7 bankruptcy, debts may be discharged in as little as 3 months. The court must approve of discharge during a hearing that takes place sometime after filing. If motions objecting to discharge are not filed, the court will discharge the debtor from all unsecured debts.

Chapter 13 bankruptcy process:

An individual may be transferred to Chapter 13 bankruptcy from Chapter 7 or they may file a Chapter 13 bankruptcy petition. A trustee is then appointed to administer the case. The petitioner must file a repayment plan with the petition or no more than 15 days after filing. About a month or so after filing, a meeting of the creditors is held to discuss interests of creditors and for the debtor to answer questions. Unsecured creditors must file a claim no more than 90 days after the meeting of the creditors to have their debt included for repayment. The debtor must complete an approved debtor education course within 45 days of the meeting of the creditors. A repayment plan hearing is held in front of the court no later than 45 days after the meeting of creditors. If the court approves the plan, the debtor begins to make payments to the trustee who distributes funds to creditors according to the plan. Creditors may make motions to modify the plan before or after the hearing. The court may dismiss the case if at the repayment plan hearing or if the debtor fails to make payments according to the plan. If the repayment plan is met and all other obligations are met, then the debtor will be discharged from all debts, with the exception of those excluded from Chapter 13 discharge.
Tags: None Add / Edit Tags
Categories
Bankruptcy Law

Comments