The Bankruptcy Process

An Overview of the Bankruptcy Process

All bankruptcy cases follow a similar process regardless of the chapter that is filed. The debtor must complete 2 counseling courses, complete and file a bankruptcy petition along with the required supporting documents and schedules, attend a trustee hearing and then wait for the discharge from the court. Chapter 13 cases require 2 additional steps. A debtor must prepare and file a repayment "Plan" showing how much of the debtor's unsecured debts will be paid. Then the debtor must attend a "Plan Hearing" where a judge will approve the "Plan."

Requirements for All Bankruptcy Cases Filed in California

All bankruptcy cases filed by individuals in California require that each debtor complete and obtain proof of completion of 2 credit counseling courses. One course is required to be completed prior to the filing of the bankruptcy case. The second course is required to be completed after the case is filed, and within 60 days of the trustee hearing.

Debtors Must Choose The Correct County to File Their Case

In order to file bankruptcy in a particular county, the debtor must qualify for filing in that county. In order to qualify for a particular county, the debtor must have resided in the county the majority of the 180 days prior to the date of filing the bankruptcy petition. Debtors that have moved from one county to another frequently wind up waiting to file their bankruptcy petition in order to be able to file where they currently reside. However, the debtor does not need to wait to file. The debtor may file in the previous county in which the debtor resided if they so choose.

Debtors Must Qualify for The Chapter Being Filed

The consumer bankruptcy chapters (7 & 13) have qualification requirements that must be met in order to utilize the particular chapter. For example, Chapter 7 has limits on the income of the debtor that may not be exceeded. Chapter 13, on the other hand, has limits on the amount of debts that can be owed in order to qualify to use this chapter. The Chapter 7 limits are discussed here. The Chapter 13 limits are discussed here.

All Debtors Must Complete 2 Credit Counseling Courses

In order to file a bankruptcy petition and obtain the protection of bankruptcy, all debtors must complete, and show proof of completion, 2 credit counseling courses. The first course must be completed prior to the case being filed with the court. The second must be completed after the case is filed. Failure to complete the second course will result in the case being dismissed by the court thereby causing the debtor to ask the court to reopen the case. This requires the payment of a filing fee of $260 plus the fees the attorney charges to handle this matter.

All Debtors Must File the Bankruptcy Petition and Supporting Documents

To initiate a bankruptcy case, the debtor must file a bankruptcy petition that identifies the chapter being filed under and the required personal data necessary to identify the debtor. Along with the petition the debtor must file other required documents and schedules. The schedules provide the court with the necessary data in order to process the debtor's bankruptcy such as income, liabilities, and assets.

All Debtors Must Attend a Trustee Hearing

After the bankruptcy case is filed with the court, the court will assign a trustee to handle the administration of the case. The court will then schedule a trustee hearing to take place about 45 days after the case was filed. The debtor must attend this hearing. Failure to attend will be grounds for the court to dismiss the case. Dismissal of the case for failure to appear at the trustee hearing will prevent the debtor from filing another bankruptcy case for 180 days. At the trustee hearing, the trustee will verify the identity of the debtor and ask the debtor questions about the petition paperwork. Creditors are allowed to also attend the hearing and ask questions of the debtor. Usually, no creditors appear and the hearing takes only a few minutes.

Waiting for the Discharge

The trustee hearing is usually the only hearing a Chapter 7 debtor will attend. A Chapter 13 debtor will attend an additional hearing to confirm the "Plan." If the trustee, or a creditor, objects to the debtor receiving a discharge, there will be additional hearings to resolve the objections. Once all objections have been resolved, the debtor waits for the formal discharge of all debts from the court. Chapter 13 debtors must wait until all "Plan" payments have been made before a discharge can be given by the court.

If You Have More Questions

Please contact us if you have more questions or are ready to move forward and start the process of becoming debt-free. Remember, we are here to help you resolve your debt problems, so call us now!

(949) 954-7568