Chapter 7 Bankruptcy Process

If you need to file bankruptcy, Chapter 7 is generally the best way to do it, providing you qualify.  The following is a basic explanation of the process.  There are more details on the linked pages.

Deciding Whether to File Bankruptcy

The first step of the bankruptcy process is your decision to file bankruptcy.  This is a very personal decision.  However, we organized a list of Eight Indicators that can lead to a bankruptcy filing.

What Is Chapter 7 Bankruptcy?

A Chapter 7 Bankruptcy is what most people think of as bankruptcy.  It’s a single day and all your debt prior to filing (with a few exceptions) will be eliminated.

How Does Chapter 7 Bankruptcy Work?

The Chapter 7 bankruptcy process typically takes from four to six months to complete. For the person filing, it involves a data collection period requiring the filling out of our questionnaire, filing the case, then attending a meeting with the creditors and a court-appointed bankruptcy trustee, and getting most or all of the debts discharged. There are filing fees of $335. This is paid to the Arizona district of the bankruptcy court located in either Tucson or Phoenix.

Before Filing

Before filing for bankruptcy you must complete a credit counseling program with an approved agency. This must be done no more than six months before you file, and can be done over the phone or internet and costs approximately $10. There is a fee of $335.  There are several approved agencies in that we use in Arizona for both the Phoenix and Tucson courts.  These will be explained in our introductory e-mail to you.

Your particular situation may influence the timing of filing for bankruptcy. While it is often an advantage to file as soon as possible (to stop a foreclosure, repossession, lawsuit or even eviction), there may also be circumstances to delay.  This is the reason for our in-depth analysis during your free initial consultation.

Bankruptcy Forms

The federal bankruptcy courts use official bankruptcy forms. The basic form that must be prepared to file for Chapter 7 bankruptcy is the Voluntary Petition. Along with the Voluntary Petition, you will need to prepare numerous other forms, which support the Voluntary petition.  It lists your property, debts, income and expenses. It is important to list all creditors and their accurate mailing addresses.

Filing with the Bankruptcy Court

Your forms will be filed with the bankruptcy court clerk. The typical practice is to file all of the forms at the same time; however, in an emergency (such as needing to immediately stop a foreclosure, eviction, or car repossession) it is permissible to file just the two-page Voluntary Petition, and file the other forms within fourteen days. This is what we do for those filing either for an emergency or for the payment plan.  Once you file the Voluntary Petition, you have turned over control of your property and debts to the court. You may not transfer any property or pay any debts without the approval of the court.  It also starts the automatic stay.  The automatic stay stops all financial and civil legal proceedings going against you.

Meeting of Creditors

The meeting of creditors is about a 5 minute meeting that is designed to determine that you are who you say you are and to have you swear under oath that everything is true and complete to the best of your knowledge.  It is conducted by one of the 20 some odd different Phoenix Trustees and the 2 Tucson Trustees.  There is one other Chapter 7 bankruptcy trustee in Northern Arizona.

It is held about 4-6 weeks after filing and if you want more details, please check our page on the Meeting of Creditors.

Discharge

Approximately 2-4 months after the Meeting of Creditors and 4-7 months after filing you will receive your bankruptcy discharge.  This essentially ends your bankruptcy case.  However, the Trustee may keep the case open for the next year to see if they can collect a tax refund later.

See if Chapter 7 bankruptcy is right for you with a free bankruptcy evaluation.