STEPS IN A BANKRUPCY CASE
- Mandatory Credit Counseling
You must obtain a certificate from an approved credit counseling agency before you can file your case. It is expected that this can be done over the internet and will likely cost approximately $35- 45. A copy of any payment plan devised by the counseling service must also be filed with the court. B. File Petition, Schedules, and Statement of Financial Affairs with the Court Gather up all of your bills and documents showing what you owe. Then, gather up all documents that show the value of your assets (car titles, titles or deeds to homes, bank statements, etc.). Then, the required court forms. When these documents, which you will sign under the penalty of perjury, are filed with the Court, you will be assigned a case number and this commences your case. In most cases, immediately upon filing your case, an injunction goes into effect stopping your creditors from taking any further action to collect or recover on any debt you owe without first getting permission from the bankruptcy court (which is only granted for specific purposes). This injunction is called the “automatic stay.” The automatic stay is really “semi-automatic” because if you have a prior dismissed bankruptcy case in the past 12 months, or if certain other conditions are met, you may need to file a motion to get the court to impose the Stay.
The following documents and forms are to be filed with the Court. — Form B1, Voluntary Petition with filing fee If you are not paying the filing fee at the time of filing, you will also need to submit one of the following: – Form B3A, Application to Pay Filing Fee in Installments or – Form B3B, Application for Waiver of Chapter 7 Filing Fee — Form B21, Statement of Social Security Number — Form B6, Summary of Schedules — Form B6A, Schedule A – Real Property — Form B6B, Schedule B – Personal Property — Form B6C, Schedule C – Property Claimed as Exempt (Carefully consult your state’s exemptions in the State-Federal Exemption chart that is applicable to your state — Form B6D, Schedule D – Creditors Holding Secured Claims — Form B6E, Schedule E – Creditors Holding Unsecured Priority Claims — Form B6F, Schedule F – Creditors Holding Unsecured Nonpriority Claims — Form B6G, Schedule G – Executory Contracts and Unexpired Leases — Form B6H, Schedule H – Co-Debtors — Form B6I, Schedule I – Current Income of Individual Debtor(s) — Form B6J, Schedule J- Current Expenditures of Individual Debtor(s) — Form B6, Declaration Concerning Debtor’s Schedules — Form B7, Statement of Financial Affairs — Form B8, Chapter 7 Individual Debtor’s Statement of Intention — Form B22A, Statement of Current Monthly Income and Means Test Calculation
(Chapter 7) OR Form B22C, Statement of Current Monthly Income and Disposable Income Calculation (Chapter 13)
— Form B23, Debtor’s Certification of Completion of Instructional Course Concerning Financial Management (Due within 45 days after the date of the first meeting of creditors for Ch. 7 Cases, and due by date of last payment for Ch. 13 Cases)
— Form B201, Notice to Individual Consumer Debtor (Form found at Appendix “C”)
— Verification of Creditor Matrix and Matrix, list of creditor names and addresses – some courts will require that the matrix be submitted on a floppy disk or CD)
— Form B240, Reaffirmation Agreement, Ch. 7 Cases (If applicable to your case) — Debtor’s Certification of Completion of Credit Counseling (credit counseling must be completed 180 days prior to filing bankruptcy)
– Will receive certificate from credit counseling agency upon completion of credit counseling.
– Along with this Certification, the debtor must file any debt repayment plan that was proposed by the counseling.
— Copies of Payment Advices (i.e. pay stubs or statements) or other evidence of payment received within 60 days prior to the date the petition was filed from any employer.
— Records of any interest in any educational IRS or qualified state tuition program, whether for the debtor’s benefit of any child or grandchild of the debtor; these would include 529 plans or tuition credit purchases
— Chapter 13 Plan (for Ch. 13 only). The plan must conform to each court’s requirements – you may also obtain a copy of the form from the Bankruptcy Court Clerk’s Office
— Any other local forms required by your District Bankruptcy Court (e.g. Certification of Domestic Support Obligation Paid; Notice to Non-Filing Spouse, etc.). You can ask the Clerk of Courts if there are any additional local forms required.
REVIEW THE BANKRUPTCY WEBSITE FOR THE COURT IN WHICH YOU WILL FILE YOUR CASE. REVIEW THE LOCAL RULES AND PROCEDURES, ETC. THE WEBSITE CONTAINS IMPORTANT INFORMATION THAT WILL ASSIST IN FILING.
The key in any bankruptcy case is listing all of the debtor’s assets and all of his or her liabilities. Be clear and concise when completing the documents. Also, make sure that all creditors are listed and that correct account numbers and addresses are listed.
Failure to comply with the filing requirements or missing deadlines may result in your case being dismissed and loss of bankruptcy protection.
- Mandatory meeting with the Trustee
This occurs 30 – 40 days after your case is filed. It is often referred to as the section “341(a) Meeting.” It is a relatively simple meeting and usually lasts 10 – 15 minutes, or less.
The Trustee is person appointed by the United States Trustee’s Office (an administrative branch of the U.S. Department of Justice) to oversee Chapter 7 cases. The Trustee’s role is to liquidate (meaning sell and turn into cash) any non-exempt assets the debtors have. The Trustee then pays those funds to your creditors according to their statutory priority in the bankruptcy code. The Trustee also monitors your case and will refer any cases or situations of fraud to the F.B.I. The Trustee can also object to the granting of discharge in your case if he/she believes your case was not filed in good faith (such as you have too much excess income to file a Chapter 7) or if you have committed fraud in connection with your petition and schedules. Most assets are exempt, up to a specific, pre-set amount.
Time for Objections by Creditors and Trustee
Your creditors have until 60 days after the date first set for your meeting with the Trustee to file a complaint objecting to the discharge of their debt, or to your entire discharge. Grounds for doing this include fraud (such as incurring charges on a credit card that you did not intend or have the reasonable ability to repay at the time they were made), false statements on a credit application, fraud while acting in a fiduciary capacity, willful or malicious injury to a person or property of a person, and certain others. Creditors can seek an extension of time to file their complaint, but as long as they received notice of your bankruptcy case, they must either file their complaint, or a motion requesting an extension prior to the expiration of the 60-day period.
In most cases, no objections are filed. The Trustee has until 30 days after the date first set for your meeting with him/her to file an objection to any exemptions you have claimed. Again, this is rare, but it can happen depending on the specific exemptions in your case. It is important to correctly list your exemptions.
- Financial Management Course
You are required to complete a financial management course before receiving your discharge. In Chapter 7 cases, you must complete this course (which usually lasts about 2 hours) and file a certificate of completion to the court no later than 45 days after the date of your meeting with the Trustee. If you fail to do this, you will NOT get a discharge.
If no creditor objects to your discharge within the 60 day period referenced above, if the Trustee has no objection or issue with your case, and if you have completed all of the other requirements, then the bankruptcy court will issue an Order of Discharge. This document makes if “official” that all of the debtors debts are discharged or erased (except those that are not dischargeable – like child support, alimony, certain taxes, student loans, and some others). The discharge applies to all dischargeable debts that were listed on your bankruptcy petition and schedules. If a creditor is not listed or did not receive notice of the bankruptcy, these MAY be able to reopen your case – but whether they can do this depends on a number of factors, including what the basis of their discharge objection is, whether assets were distributed in your case, etc.