When Can I Expect My Bankruptcy to End?

Learn about the specific stages of a Chapter 7 bankruptcy, including petition submission, the automatic stay, creditor meetings, and the discharge process. Get insights into each phase to effectively manage and conclude your bankruptcy journey.

Your Chapter 7 bankruptcy involves a sequence of critical steps each of which marks a milestone in your journey towards financial recovery. From submitting your initial petition to attending crucial meetings and addressing potential creditor objections, you must understand these phases to progress toward the conclusion of your bankruptcy case.

You Submit Your Chapter 7 Bankruptcy Petition

Your bankruptcy case starts when you submit a packet of papers—known as the petition—to the court. In the petition, you need to disclose all aspects of your finances, including your income, debt, property, and property transfers going back as many as ten years. You’ll also attach a certificate of completion showing that you took credit counseling from an approved agency within the previous six months. In most cases, the course takes a few hours online or by phone.

An Automatic Stay Stops Your Creditors While You Gather and Submit Paperwork

After you file your bankruptcy petition, the bankruptcy court assigns a trustee to oversee your bankruptcy, and an automatic stay is put into place if it’s your first bankruptcy filing. The automatic stay prohibits almost all of your creditors from continuing collection actions. Creditors cannot call you, collect money from you, foreclose on your home, repossess your car, or place a lien on your property. Exceptions to the automatic stay exist, however, and creditors can go into court and ask the judge to lift (remove) the automatic stay.

At least five days before your 341 meeting of creditors, you’ll need to send documentation to the trustee that proves the statements you made in your petition. If you have an attorney, then your attorney will require that these documents are provided to them prior to filing your petition. You will provide them with your most recent tax return, bank statements, paycheck stubs, and more, depending on what your assigned trustee requires for your case.

Your trustee will also prepare for the meeting of creditors by reviewing your petition and documentation. The trustee can also ask for other financial papers, like real estate deeds, car titles, proof of insurance, mortgage and vehicle loan statements, and marital settlement agreements and court orders. Depending on your trustee you’ll be able to send the documents by email, upload them to a secure website, or send them by mail.

You Attend a 341 Meeting of Creditors

After you file for Chapter 7 bankruptcy, you must attend a hearing called the 341 meeting of creditors. The meeting is mandated by Section 341 of the Bankruptcy Code. It is held outside of the presence of the judge and usually occurs between 21 and 50 days after you file your petition. At the meeting, the bankruptcy trustee—the person responsible for overseeing your case—will verify your identity and ask questions about your bankruptcy filing under oath. Your creditors will also have the opportunity to ask you questions about your financial affairs and the information in your bankruptcy papers but rarely do. Creditors aren’t required to attend these meetings and do not waive any rights if they don’t attend. The meeting usually lasts only 10-15 minutes and may be continued if the trustee isn’t satisfied with the information presented.

The Court Delivers a Discharge Letter for Your Bankruptcy

Your discharge letter is the order that the bankruptcy court mails out toward the end of your case if it goes smoothly. The order officially wipes out your qualifying debt, such as credit card and utility bill balances, medical debt, and personal loans. The court issues your discharge letter 60 days after the date of your first 341 meeting of creditors. The order could be delayed, or even prevented, by a creditor who successfully opposes the discharge.

The discharge officially releases you from qualifying debt liability. It also prohibits creditors from attempting to collect the discharged debt. The court alerts everyone involved—you, your creditors, and all legal counsel—by mailing everyone a copy of the discharge order. The letter will not explicitly list the debts discharged in your matter. Instead, it will delineate the categories of debt commonly discharged in bankruptcy. You should keep a copy of the letter handy in case a creditor calls who needs information like the case number and discharge date.

Although you aren’t personally liable for discharged debts, a valid lien (i.e., a charge upon specific property you own to secure payment of a debt) that you haven’t avoided (i.e., made unenforceable) in your Chapter 7 filing will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

How a Creditor’s Adversary Proceeding Can Affect Your Bankruptcy Timeline

A creditor can file an objection to the discharge of its particular debt when fraud or an intentional wrongful act occurs before the bankruptcy case. The creditor can file that objection as a motion or lawsuit called an adversary proceeding. Some common types of non-dischargeable debts for which creditors can challenge a discharge include:

  • Certain types of tax claims
  • Debts not set forth by the debtor on the lists and schedules the debtor must file with the court
  • Debts for spousal or child support or alimony
  • Debts for willful and malicious injuries to a person or property
  • Debts to governmental units for fines and penalties
  • Debts for most government-funded or guaranteed educational loans or benefit overpayments
  • Debts for personal injury caused by the debtor’s operation of a motor vehicle while intoxicated
  • Debts owed to certain tax-advantaged retirement plans, and
  • Debts for certain condominium or cooperative housing fees.

If the adversary proceeding goes forward, the issue of your right to a discharge goes to trial for the creditor to prove all the facts of the objection. The trial itself would disrupt the normal timeline of your Chapter 7 process.

Get in Touch With Richard P. Arthur

Richard P. Arthur, Attorney at Law, can help you file for bankruptcy and prepare for your hearing. You can call 937-254-3738 for a consultation. He has more than three decades of experience helping clients in Dayton and Trotwood, as well as Montgomery, Greene, Miami, Clark, and Warren counties.