The Mechanics of Filing a Chapter 7 Consumer Bankruptcy

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The Initial Free Consultation

The first decision a debtor must make when considering bankruptcy is which attorney they should consult with to determine their eligibility to file and retain to file for them. Some attorneys like myself offer a free consultation to determine whether Chapter 7 is a viable option for a debtor. This consultation should be a face to face meeting normally held at the attorney's office. The debtor should be prepared to provide the attorney with an accurate summary of the amount and type of debt owed by them, of the assets owned by them and of all sources of income for this initial conference. At this initial conference in addition to reviewing financial information the attorney will provide certain requisite disclosures to the debtor required by the Bankruptcy Code and the proposed fee agreement. Based on this initial interview and possibly some follow-up information for means testing and asset purposes the attorney shoud be able to determine that a Chapter 7 can be filed.


Client Intake Meeting

After the decision is made to proceed with the Chapter 7 a followup appointment is made with the attorney and the retainer agreement is signed in conjunction with the payment of the retainer fee. The attorney will review the bankruptcy worksheet with the client and list of documents required for the filing. The client will execute the necessary authorizations to obtain personal information including a credit report. The client will be instructed how to obtain the necessary credit counseling to file and obtain their bankruptcy discharge. They will be instructed as to timelines and dos and don'ts during the pre-filing period. The client will be educated as to their rights under the Fair Debt Collection Act and how to handle creditor calls and harasssment during the pre-filing period. Any special or unique issues will be discussed and addressed and appropriately investigated to avoid any surprises at the client's creditors meeting.


Filing Process

Once the client has completed the worksheet and delivered it with the required financial documents to the attorney the client's bankruptcy petition and schedules will be prepared. The client must complete the pre-filing credit counseling and have the certificate for filing with the court. After some fine tuning of the details of the petition and schedules the attorney will schedule the appointment to sign these documents. At this appointment the client will be required to bring certain updated financial documents including for example bank account printouts with balances as of the date of filing to ensure the accuracy of the schedules. The attorney will review with the client the petition and schedules as they are signed. The attorney will review the process going forward including the effect of the automatic stay, the creditors meeting and trustee requirements for same. In most cases the clients's bankruptcy filing is electronically filed by the attorney the same day.


Creditors Meeting

The creditors meeting is conducted by the Chapter 7 Trustee usually about 30 days from filing date. The debtor is required to attend with their attorney and provide testimony under oath as to the accuracy of their bankruptcy filing. The attorney helps the debtor prepare for the meeting by helping them complete any trustee questionnaires and providing all requested documents to the trustee at least a week prior to the creditors meeting. At the meeting the trustee focuses his inquiry on any potential non-exempt debtor assets that he may auction off for the benefit of creditors as well the debtors' income and possible means-testing issues. In almost all consumer cases no actual creditors attend this meeting, however, in certain unusual cases a creditor may appear to ask questions concerning assets and the debt owed that creditor. In most consumer cases the trustee will complete his review at the creditors meeting and indicate his intention to file a no asset report.


Bankruptcy Discharge

The debtor's discharge of their debts is issued sixty days after the completion of their creditors meeting unless the U.S. Trustee files a motion to dismiss or convert for an abusive filing or there is an objection to discharge filed by a creditor as to their debt. Both involve unusual circumstances and if the attorney has prepared the bankruptcy filing properly and the debtor has been truthful these motions can be avoided. In order to receive this discharge the debtor needs to have completed and received the certificate for the pre-discharge debtor education course within 45 days of the creditors meeting.The debtor should keep this discharge along with the petition and schedules provided by his attorney for future reference if a creditor contacts them about old debt. They may also be asked to produce these documents when they try to get a loan in the future. This guide is an attempt to provide a basic overview of what is a complex process that requires experienced legal guidance.

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