Understanding the bankruptcy process can help reduce your fears and uncertainties. This guide will take you through the bankruptcy timeline step by step, explaining what to expect. It will give you a better understanding of Chapter 7 and Chapter 13 bankruptcy.
Getting Ready for Bankruptcy
Preparation is key to the bankruptcy process. Start by consulting an experienced attorney who can assess your financial situation, provide advice on the best course of action, and guide you throughout the process.
Filing Your Bankruptcy Petition
Once you’ve completed credit counseling, your bankruptcy lawyer will assist you in preparing and filing the bankruptcy petition. This document is crucial because it outlines your current financial situation, including your assets, debts, income, and expenses. Your attorney will also provide the necessary schedules, statements, and other forms.
Automatic Stay
When you file a bankruptcy petition, something called an “automatic stay” takes effect immediately. This powerful provision stops any collection actions by creditors, including lawsuits, wage garnishments, foreclosure proceedings, and harassing telephone calls. The automatic stay gives you breathing space to navigate the bankruptcy process.
Meeting of Creditors (341 Meeting)
Approximately 20-40 days after filing your bankruptcy petition, you and your attorney should attend the Meeting of Creditors, also known as the “341 Meeting.” At this meeting, you’ll meet the bankruptcy trustee assigned to your case and any creditors who choose to attend. The trustee will ask questions about your finances and verify the accuracy of your bankruptcy petition.
Determining Eligibility for Chapter 7 or 13
For Chapter 7 bankruptcy, the means test is conducted at the Meeting of Creditors to determine eligibility. This test evaluates your income and expenses to decide if Chapter 7 bankruptcy is suitable for you, or if Chapter 13 is a better option.
Chapter 7: Liquidation Process
If you opt for Chapter 7 bankruptcy, the liquidation process begins after the Meeting of Creditors. The trustee will identify your non-exempt property, which may be sold to pay your creditors. Working closely with your lawyer is crucial to claim all exemptions and protect as many assets as possible.
Chapter 13: Repayment Plan
If you choose Chapter 13 bankruptcy, you and your lawyer will create a bankruptcy payment plan. This plan outlines how you will pay off your debts over a period of three to five years. Once approved by the court, the plan will be sent to you for review.
Understanding these steps and having the guidance of a knowledgeable attorney can make the bankruptcy process more manageable and less daunting.
This post was written by Trey Wright, an experienced bankruptcy lawyer Jacksonville FL! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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