What Happens In Bankruptcy?

What actually happens during bankruptcy is the release (or total forgiveness) of your debts. To get this release, you must provide some financial documents and official government paperwork to formally request that your debts be forgiven. After the full bankruptcy process is completed, you will receive a “discharge” that permanently eliminates your debt.

Providing Paperwork and Finishing Forms

You will be required to provide certain paperwork including a list of your creditors, your current income, and at least two years of taxes. After you have provided the paperwork and take a small required bankruptcy class, you can then review and sign your petition with your attorney. This gets everything ready so that your case can be filed. There are usually also court costs and attorney fees required for the process as well.

Filing the Bankruptcy Case with Federal Court

Image depicting What happens in bankruptcy

You or your bankruptcy attorney will then file your bankruptcy request with the federal court. During a filing, you must submit a full, completed bankruptcy petition that is accompanied with other required paperwork and documentation. Usually, you must also submit your last 60 days of income and a copy of the certificate that shows that you have taken the required bankruptcy class. After the case is filed, a trustee (a bankruptcy-reviewer) will automatically be assigned to the matter to review the case. Also, a bankruptcy meeting will be set out 30-40 days into the futurewhere you will briefly meet with this trustee and any creditors who wish toattend.

The Bankruptcy Meeting and Required Follow-Up

After the case is filed, you will go to this single bankruptcy meeting.  The trustee will ask you a series of questions related to your case. Even though the bankruptcy case is already filed, certain follow-up work will be required with your attorney and sometimes the trustee. This follow-up work will likely occur both before and after the bankruptcy meeting.
It is critically important to follow the instructions of your attorney and bankruptcy trustee to make sure that your Chapter 7 Bankruptcy is successful. You also must take your second bankruptcy class and make sure that the certificate is filed with the court.

Do You Need Bankruptcy to Actually Happen for You?

The above description of the chapter 7 bankruptcy process hopefully dispels any initial fear of what actually happens during bankruptcy. The bankruptcy process is not as stressful as you may think.  In fact, the bankruptcy process usually instead brings desperately-needed stress relief. Contact a bankruptcy attorney for a free consultation to allow you to consider whether bankruptcy is right for you.