The Chapter 7 Bankruptcy Process

Most people breeze through Chapter 7 bankruptcy without a problem—and knowing what to expect will help you do the same. Here's what you'll do:

• learn how Chapter 7 bankruptcy works
• take a credit counseling course
• complete and file bankruptcy paperwork
• attend the 341 Meeting of Creditors, and
• complete the debtor's education course.

We explain the details below.

Steps in the Chapter 7 Bankruptcy Process

The process is predictable. Here's what will happen and what you'll need to do.

1. Decide whether Chapter 7 bankruptcy is right for you.

Most people prefer Chapter 7 because it's quick and doesn't involve paying anything to creditors. But bankruptcy isn't for everyone. Be sure to check whether you can eliminate or "discharge" your debt and keep or "exempt" your property. You'll also want to understand and prepare for the downsides of bankruptcy by securing housing, a bank account, and more.

2. Check your Chapter 7 bankruptcy qualification status.

Chapter 7 is for people who don't have anything left to pay creditors after paying monthly living expenses. To find out if you're eligible, take the Chapter 7 means test. If you don't want to do the calculations, a local bankruptcy lawyer can qualify you fast and probably won't charge for the first visit.

3. Gather your Chapter 7 financial documents.

It takes a lot of financial information to complete the Chapter 7 petition and schedules, including paycheck stubs, bank statements, tax returns, and more. If you don't know where to start, our Chapter 7 document list will help.

4. Take the credit counseling course.

You must receive credit counseling from an agency approved by the U.S. Trustee Program (the list is on their website) sometime during the six months before filing. You'll file the certificate along with your bankruptcy petition. Learn about exceptions to bankruptcy class requirements.

5. File the Chapter 7 bankruptcy paperwork.

Before completing your bankruptcy paperwork, make sure that you're timing your bankruptcy filing correctly. If it's a go, you'll complete and file the completed forms along with your counseling course certificate and the bankruptcy filing fee or a request for a fee waiver. Once you file, the automatic stay will stop most creditor collection actions during your case.

6. Give your documents to the Chapter 7 bankruptcy trustee.

You'll turn over financial documents to the bankruptcy trustee appointed to administer your case. Plan to turn over paycheck stubs, bank statements, tax returns, and more at least seven days before the 341 meeting of creditors—the appearance all filers must attend. Some courts require debtors to file tax returns with the court, so check your local rules for details.

7. Attend the 341 meeting of creditors.

You'll receive a notice from the court with the time, date, and location of the meeting of creditors. At the meeting, you'll answer questions from the trustee (and creditors if any attend—they usually don't) about your identity and the information in your petition. Most filers talk to the trustee for about ten minutes.

8. File the debtor's education course.

Before receiving your discharge, you must complete a debtor's education course. Many providers will file the certificate with the court for you. If not, make sure to do so, otherwise, you won't receive your debt discharge.

9. Wait for your debt discharge and case closure.

You'll receive your bankruptcy discharge in the mail about four months after filing the case. If you're like most filers, the court will close your bankruptcy case a few days later. A Chapter 7 case will remain open longer if the trustee needs more time to sell property or if litigation remains ongoing.

10. Start rebuilding your credit.

With your discharge in hand, you'll be ready to begin living your new life. Find out what you can do to rebuild your credit after bankruptcy.

Navigating Your Bankruptcy Case

Bankruptcy is an unusual area of law because it's essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can't skip a step.

The forms and resources below will help you find more information. Also, you can use this list of Chapter 7 and 13 bankruptcy forms to see where this topic falls. And this handy bankruptcy document checklist will help you gather the things you'll need to complete the petition.

Need More Info?

We want to help you find the answers you need. Go to TheBankruptcySite for more easy-to-understand bankruptcy articles, or consider buying a self-help book like How to File for Chapter 7 Bankruptcy by Attorney Cara O'Neill and Albin Renauer, J.D.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by consulting with a local bankruptcy lawyer.