One of the most commonly types of bankruptcy filed is chapter 7. This type of bankruptcy is also referred to as liquidation bankruptcy as in the end you will have liquidated most of your debt if not all of it! Any non-exempt properties that you may have will be sold. This will be done by your bankruptcy trustee so as to pay off creditors with the proceeds. Exempt properties will remain under your name. When embarking on the process of chapter 7 bankruptcy, there will be numerous forms to fill out and these forms will be obtained from the bankruptcy court. It is prudent to begin this process with a solicitor who can guide you through bankruptcy law. So what can you expect once you file for chapter 7 bankruptcy?
Stage 1: Automatic stay
During this stage, both your secured as well as unsecured debtors will be stopped from collecting what you owe them. This stage is automatic since it is an injunction issued by the court without you even having to have requested for it. This stage is supposed to give you some peace of mind as it ensures that your bankruptcy trustee and not your creditors that will determine what you get to keep as your property. You will find that non-dischargeable loans will also be covered under automatic stay.
Stage 2: 341 hearing
This is a meeting between you, your solicitor, a bankruptcy trustee and your creditors. Once you are done with filing the necessary paperwork at the bankruptcy court, your creditors will be notified so as to give them a chance to file any objections that they may have. This will be followed by a scheduled hearing. The notice that is given to the creditors is known as a 341 notice and thus the meeting is named after that. At this meeting expect your bankruptcy trustee to ask you questions such as if you have ever filed for chapter 7 bankruptcy before, if the information you have provided is accurate and so on. A bankruptcy trustee is typically appointed by the court; therefore, it is still recommended to enlist legal services from your own solicitor.
Stage 3: Discharge
Two months after the 341 meeting, you should expect to receive a notice of discharge. This gives you the go ahead to move on with your life without pending debt. However, if you come into any money during the 60 day period after filing for chapter 7 bankruptcy such as through an inheritance, insurance, divorce and so on, you are required to report this to the bankruptcy court.
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