Bankruptcy can be very disruptive, but understanding the process can help. Learn what to expect during the Chapter 7 bankruptcy timeline here.

For many of us, there will come a day when we deal with financial distress. This could be due to injury, job loss, etc. In fact, nearly 390,000 people filed for bankruptcy in 2022.

While money problems aren’t always severe, it’s essential to understand the Chapter 7 bankruptcy timeline if you choose to go this route. This will help ensure you know exactly what you’re getting into. Let’s explore the key factors you need to consider.

Step One

Before you file, you’ll need to complete a mandatory credit counseling course. You can do this over the phone or online.

You also have the option to complete the course in person. These often last between 60 and 90 minutes.

However, the course must be provided by an approved credit counseling agency. You can take the required credit counseling course at any time within 180 days before filing for bankruptcy. It’s best to do so sooner rather than later so you can avoid complications.

Step Two

At this point, you can file official bankruptcy forms. These must list all of your creditors and owned property.

You also need to provide information about your financial transactions over the previous two years. This part of the process will help determine your eligibility.

For example, your annual income may impact whether you qualify for Chapter 7 bankruptcy. The same can be said about the type of debt you have, such as student loans or alimony payments.

Step Three

After you file the official forms, you can mail the required documents to your local court’s bankruptcy trustee. This includes information like your most recent income tax return.

Depending on your situation, they may ask for additional info. In most scenarios, those who qualify for Chapter 7 bankruptcy won’t need to give supplemental documentation.

Step Four

Approximately 30 days after you file for bankruptcy, you can attend a creditors’ meeting. This is generally the only physical appearance you’ll need to make during the process.

A creditors’ meeting occurs in a hearing room and is conducted by the court’s bankruptcy trustee. Despite the name, it’s notably rare for creditors to attend this meeting.

You’ll be required to answer certain questions under oath about the information in the documents you provided. The trustee may also ask you relevant questions about your financial situation.

If all goes smoothly, this meeting will last less than 10 minutes. Regardless of whether you have a lawyer with you, you have to directly answer the trustee’s questions.

Step Five

Within 60 days after you attend the creditors’ meeting, you must attend budget counseling. You can do so over the phone or online.

You’ll receive a certificate of completion from your counseling agency that you can present to the court. If you don’t attend budget counseling within 60 days, this could significantly delay the Chapter 7 bankruptcy process.

Step Six

This requires you to remain in a holding pattern until notified by the court’s trustee. This means you can’t operate a business with inventory or give away/sell property without their permission.

Approximately 60 to 75 days after your creditors’ meeting, the court will provide you with a written discharge of your debt. Before you receive the notice, creditors have the opportunity to object to the removal of your debt. However, they seldom do so.

If you have nonexempt property, the trustee will arrange for you to turn it over. In most circumstances, those who file for Chapter 7 bankruptcy won’t have any assets in this category.

Getting Started

Although this process is straightforward, it can be complex to navigate. Hiring a lawyer goes a long way toward helping you avoid complications. They can also increase your chances of getting the best results.

When searching for an attorney, look at their past reputation and see what previous clients have to say about their services. You should prioritize attorneys who often work with people like you. Otherwise, you might not get the results you expect.

Check their pricing structure before you get started. Some attorneys bill by the hour, while others charge a flat fee for their services. It’s in your best interest to hire a lawyer who charges a flat fee.

Lawyers who bill by the hour sometimes embellish how much they’ve worked, leading you to pay more than you expected. They might also charge you extra money for basic services like responding to emails.

Consider how comfortable you are communicating with your bankruptcy lawyer. If they don’t seem interested in helping you reach your goals or aren’t easy to get in touch with, search elsewhere for a solution.

Avoiding Bankruptcy

The best way to manage bankruptcy is by avoiding it. You can do so by developing a proactive debt payment strategy.

For people who have multiple forms of debt, focus on those with the highest interest rates. You can also seek debt consolidation to ease repayment and reduce the amount you owe in interest.

Strive to save as much money as possible. Common ways to save include cooking meals at home and minimizing unnecessary purchases.

Debt settlement can also help you avoid bankruptcy. This situation involves creditors settling for a lower total repayment amount.

For example, someone may have $100,000 in medical debt that they cannot afford to pay. A creditor may be willing to settle for $15,000 as long as the individual makes the required payments.

Many people in debt look for ways to make extra money on the side. This could involve searching for a better-paying job or picking up gig work. Finally, selling unneeded assets can help you pay off outstanding debt.

Keep in mind that bankruptcy is a last resort. You should only pursue this option if you have exhausted other methods of relieving financial distress.

Understand the Chapter 7 Bankruptcy Timeline

At first, navigating the Chapter 7 bankruptcy timeline can seem difficult. Working with a professional can help ensure this process goes as smoothly as it should. From there, you can overcome the Chapter 7 bankruptcy requirements and get your finances back on track.

No matter your situation, Johnson/Turner Legal is here to help. Book a guidance call today to learn more about our flat fee services!