Steps to Chapter 7 Bankruptcy

What are the Steps to a Chapter 7 Bankruptcy?

Step 1 of a Bankruptcy: Initial consultation: During your initial bankruptcy consultation you will meet with one of our bankruptcy attorneys to review your financial situation and decide if bankruptcy is appropriate. If bankruptcy is appropriate in your situation then we will begin gathering all of necessary documents and complete the bankruptcy questionnaire.

Step 2 of a Bankruptcy: Complete the Credit Counseling Course: Take the online class within 180 days of the bankruptcy filing. A personal bankruptcy cannot be filed without completing this class, regardless of whether you are filing a Chapter 7 or Chapter 13 bankruptcy.

Step 3 of a Bankruptcy: Filing the Bankruptcy: You will review and sign the Petition and Schedules to be filed with the court. These documents are signed under oath and the penalty of perjury. Pay the $335 filing fee to the law firm. As a law firm we are required to file bankruptcies electronically so you are not required to actually go anywhere or do anything on the day of filing.

Step 4 of a Bankruptcy: The bankruptcy Court mails a Notice of Bankruptcy: The Notice of Bankruptcy is mailed to all creditors, the trustee, the debtor and the attorney approximately one week after the case if filed. The Notice of Bankruptcy also contains the date of your 341 Hearing and certain deadlines.

Step 5 of a Bankruptcy: Mail forms and documents to the Trustee: A few days after filing bankruptcy your Trustee will send you a letter asking several questions and requesting documents. You must submit the completed form and all requested documents to the Trustee within 15 days of your 341 Hearing. Your case may be dismissed if you do not meet this deadline!

Pursuant to Arizona Local Rule 2003-2(a)(1) and 2003-2(a)(2) a questionnaire and additional documents must be supplied to the Trustee prior to the 341 hearing.

Step 6 of a Bankruptcy: Financial Management Class: This post filing class is required to receive a discharge of your debts. The certificate must be filed within 45 days of your 341 Hearing. Do not delay in taking this class; you will not receive your discharge until this class is completed!

Step 7 of a Bankruptcy: 341 Hearing: About 30 to 45 days after the bankruptcy is filed; you and your attorney must attend a 341 hearing. The hearing is held in different courthouses depending on which county you live in. During this meeting the Trustee will ask you a set of generic questions. Creditors will also have the opportunity to appear and ask questions—though creditors rarely take the opportunity to appear.

Step 8 of a Bankruptcy: Discharge of Debts: Roughly 70 to 90 days after your 341 hearing you will receive a Discharge Order in the mail. Click HERE to see an actual Discharge Order. This same discharge is mailed to all relevant parties, i.e., creditors, Trustee, and your attorney.

Step 9 of Bankruptcy: Trustee’s Report of Distribution: A bankruptcy trustee’s report of no distribution that has been filed in your case states that there are no funds or assets to distribute to creditors because all of your assets are exempt (protected from liquidation). In a Chapter 7 bankruptcy case, unexempt assets are liquidated by the trustee, and the proceeds from the sale of these assets are used to pay off creditors to the extent possible. Once the report is filed, creditors are notified that there will be no distribution in your case. This means that the creditors will be put on notice that they will not receive any payment from the bankruptcy estate, and their claims are discharged. Of course, unless they fall into specific categories of non-dischargeable debts. Such as child support, alimony, tax debts and student loans.

Step 10 of a Bankruptcy: Close of Bankruptcy: Your Trustee will normally close your case within 120 days of your bankruptcy Discharge. Click HERE to see a actual notice of no distribution. However, cases can remain open for several years if the Trustee took money or property and needs time to sell the property and distribute the money to creditors.

Step 11 of a Bankruptcy: Taxes–the following year: Once you file your taxes for the tax year in which you filed bankruptcy, you must send complete copies of your Federal and state tax return to your Trustee. Depending on the timing of your bankruptcy and tax filings this may be more than a year after the bankruptcy was filed. In addition to sending your tax return to the bankruptcy Trustee you must also send your tax refunds. In most cases the Trustee will take any refund that was owed to you on the day the bankruptcy was filed. This last step is not an option; failure to comply may jeopardize your bankruptcy discharge.

  1. Preparing Your Paperwork
  2. Documents for Trustee-Several weeks after your bankruptcy is filed but before your 341 hearing you will receive a letter from your trustee requesting documents from you. Your trustee wants you to send these documents directly to them as a way to double-check that the information I submitted in your bankruptcy petition and schedules is true and accurate.
    • Additionally, you must sign an affidavit verifying that all of the information you’ve submitted is true and correct.

Less Common Steps of Bankruptcy

If you need help from an experienced Arizona attorney, then contact the Dunaway Law Group at 480-702-1608 or message us HERE.

* The information provided is informational only, does not constitute legal advice, and will not create an attorney-client or attorney-prospective client relationship. Additionally, the Dunaway Law Group, PLC limits its practice to the states of Arizona and New York.