A bankruptcy attorney will prepare your bankruptcy “petition” to file with the court. Depending upon your circumstances, a bankruptcy petition may be 50 pages or more. The petition includes all your financial information, your financial history, and a list of all of your assets, cars, real estate, personal property, bank accounts, CDs, IRAs, and life insurance policies. It also includes lists of all of your debt, including credit card debt, medical bills, personal loans, bank loans, mortgages, and car loans. The bankruptcy petition also lists the names and addresses of all of your creditors.
As soon as you file the bankruptcy petition, the Bankruptcy Code imposes an injunction on all of your creditors called the “Automatic Stay.” The automatic stay prohibits creditors from any further collection activities, including lawsuits, wage garnishments, collection calls, collection letters, bank restraints, foreclosures, or repossessions.
The Bankruptcy Court will then appoint a “trustee” to supervise your case. The bankruptcy trustee is typically a local bankruptcy attorney who will review your bankruptcy petition – though the trustee could be an accountant or other person with financial expertise. In addition to the materials provided in your petition, you must provide to the trustee copies of your tax returns, pay stubs, bank statements, and appraisals for your home or car. The trustee is responsible for the management of your “bankruptcy estate” which is composed of all your non-exempt property.
Approximately 3-4 weeks after your bankruptcy petition is filed, you will meet with the bankruptcy trustee for the “Creditor’s Meeting” or “341 Meeting.” The bankruptcy judge is not present at this meeting The trustee conducts this meeting in a large room at the bankruptcy court. The trustee will usually schedule 40-50 such meetings for the same time. Each meeting usually lasts from five to fifteen minutes and is audio recorded. This meeting is called a “Creditor’s Meeting” because your creditors have the right to appear at this meeting and to question you about your bankruptcy, your petition, or your assets. However, most creditors choose not to appear at these meetings.
In a Chapter 7 case, if the bankruptcy trustee determines it is a “no-asset” case, then you will likely receive a discharge of all your unsecured debts within 4-6 weeks after the Creditors Meeting. If the trustee determines there are potential assets or equity in assets to pay creditors in your bankruptcy estate, then the trustee will begin the process of selling those assets to collect a “pot” of funds in the estate to pay your unsecured creditors.
In a Chapter 13 case, following the Creditor’s Meeting, you will begin (or continue) making payments to the trustee under your plan. The trustee will then disburse payments to the unsecured creditors (and sometimes the secured creditors) under your plan. Barring any other issues that the Bankruptcy Court must address, your plan will be confirmed. Upon the completion of your plan, you will receive your discharge.