The Chapter 7 process is pretty straightforward. Theoretically when you file Chapter 7, all your property goes into a bankruptcy estate. The estate is then sold (liquidated) and the proceeds are paid over to your creditors. Most people filing Chapter 7 will find that most of their property is considered exempt and that they have little or no non-exempt property to liquidate. An experienced bankruptcy attorney will be able to tell you what property is considered exempt. If you think you have an asset that will not be exempt, you should talk to a bankruptcy attorney before drawing any conclusions. You may be surprised to find that you can manage to keep it after all.
Chapter 13 (Adjustment of Debts of an Individual with Regular Income)
In order to be eligible to file Chapter 13, you have to be an individual with regular income, who owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $336,900 and noncontingent, liquidated, secured debts of less than $1,010,650, or be an individual with regular income and such individual’s spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition, noncontigent, liquidated, unsecured debts that aggregate less than $336,900 and noncontingent, liquidated, secured debts of less than $1,010,650.
It is important to realize that only individual debtors may claim exemptions. There is a difference between what the property subsequently produces, which is considered property of the estate and what an individual subsequently acquires. What you acquire after you file bankruptcy is not usually property of the estate. There are certain exceptions for property acquired 180 days after the petition by bequest, devise or inheritance, as a result of a property settlement or divorce decree or from a life insurance policy or death benefit plan. An individual’s postpetition earnings are not considered property of the estate.
Upon filing your bankruptcy petition, the Automatic Stay goes into effect. The automatic stay is very broad. It stops lawsuits and lien enforcement. It applies to all entities and to most actions based on pre-petition claims or causes against the property of the estate and against the debtor.
Bankruptcy Trustee – Meeting of Creditors
The United States Trustee appoints an interim trustee. A meeting of the creditors is scheduled. This is usually the only official appearance that you will have to make. The meeting of the creditors is usually held not less than 20 days and no more than 40 days after your filing date. At this meeting, the trustee and creditors can question you regarding acts, property or matters affecting the estate or the discharge of debts. Most of the time, questioning is only performed by the bankruptcy trustee.
After the Conclusion of the Meeting of Creditors
Objections by the trustee or a creditor to any claim of exempt property must be filed within 30 days after the conclusion of the meeting of the creditors. As of the 31st day after the conclusion of the meeting of creditors, your bankruptcy estate is modified slightly. Exempt property is no longer considered property of the estate.
Timely filed objections are heard and resolved by the Bankruptcy Court.
Unless the trustee or a creditor has filed an objection to the general discharge of all debts not later than 60 days following the first date set for the meeting of creditors or unless the trustee or creditor has filed a motion for extension of time before the 60 days have expired, the order granting the general discharge of debts may be entered on the 61st day.
If a creditor files a complaint to determine the dischargeability of a debt within the 60 days, this does not delay the entry of the general discharge.