Call us now at 248.642.5400 to see if you may be able to avoid filing bankruptcy. We can devise a creditor workout plan for you that may involve debt negotiation, debt reduction, or settlement with creditors.
Declaring bankruptcy can be a complicated legal process, but with help from your attorney, the proceedings become relatively quick. Bankruptcy is designed to help individuals and businesses return to solvency. The laws are straightforward and crafted to make sure you are protected. Be warned however, that attempting to hide assets or commit fraud, or usage of the bankruptcy laws in a deceitful way, will cause your case to be full of unpleasant surprises and frustrating delays.
Most bankruptcies proceed in a similar timeline and the bullet points below sketch out what you should expect throughout the process. It also helps to know some of the nomenclature that is used in bankruptcy cases. Local court rules, state laws and rules of civil procedure might vary your case, but the timeline listed below is, for the most part, standard.
Your attorney will help you understand exactly how your case will proceed and, remember, your attorney works for you and should clearly explain every step of the legal process.
A bankruptcy case begins with a Petition. The Petition is a complex document and includes a description of your debts. Typically, because the filing requirements are so stringent, a lawyer will prepare this document. In most cases, preparing and filing your Petition is the hardest part of the process.
The Petition will be under Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 discharges your debts; Chapter 13 allows you to pay most of them off over time. (There are other Chapters: Chapter 11 deals with business reorganization, and other Chapters deal with farms, railroads and municipalities.)
When you file bankruptcy, federal law imposes an “automatic stay,” which prevents your creditors from taking any action to collect debts against you, including court judgments and tax debts, during the pendency of the bankruptcy. For instance, if you have been served with a lawsuit by one of your creditors to appear in court over a debt, the bankruptcy filing will stop the lawsuit.
Shortly after filing for bankruptcy, the Bankruptcy Court will send out a Notice of Filing and a Notice of Stay to your creditors. These Notices make it illegal for your creditors to continue trying to collect from you, although they are free to contact your attorney. If you are contacted before the Notices go out, you should tell the creditor that you filed and give them the Bankruptcy Court docket number.
Within thirty days after your filing, you will have to attend a “Meeting of Creditors” chaired by the Bankruptcy Trustee assigned to your case. Unless there is a “red flag” that alerts the Trustee that your case is unusual, this will be a brief meeting. Generally, the Trustee will ask you a few general questions and a few questions unique to your case, and then will solicit questions from any creditors that choose to attend. In most cases, creditors tend not to attend although some credit card providers attend the Meetings of Creditors.
If the Meeting of Creditors does not raise any red flags, the process is probably over for you. If you are filing a Chapter 7 Petition, you will receive a Notice of Discharge in about six weeks. If you are filing under Chapter 13, you will receive a Notice of Confirmation in about the same time and begin making structured payments soon thereafter.
In the event creditors have objections to your discharges, they have a certain amount of time to file an adversary proceeding. An adversary proceeding asks the Bankruptcy Court to refuse to discharge a certain debt for some particular reason. The most common reason is fraud, either giving rise to the debt (such as embezzlement from your employer) or fraud in the bankruptcy (such as failing to disclose all of your assets). An adversary proceeding process will determine the outcome. The discharge of your debts will be delayed until the adversary proceeding is resolved.
If there are no objections with your Chapter 7 Petition, or once you have completed your Chapter 13 plan, you will receive a Notice of Discharge.
It’s hard to say how long these steps will take in your case. The entire process can take as little as three months, to as long as five years. Bankruptcy is one of those rare areas where the process is faster in population centers. In Manhattan, you can receive a Chapter 7 discharge in about three months, whereas it takes about twice as long in rural Nevada. Chapter 13 plans are usually on a timeline of three to five years. The length of adversary proceedings is uncertain, although most Bankruptcy Courts are vigilant about moving the cases through the system quickly.
It’s hard to say how long these steps will take in your case. The entire process can take as little as three months, to as long as five years. Bankruptcy is one of those rare areas where the process is faster in larger population centers. In Manhattan, you can receive a Chapter 7 discharge in about three months, whereas it takes about twice as long in rural Nevada. Chapter 13 plans are usually on a timeline of three to five years. The length of adversary proceedings is uncertain, although most Bankruptcy Courts are vigilant about moving the cases through the system quickly.
FREE CREDIT REPORTS
Since December 1, 2004, free annual credit reports are made available upon the consumer’s request, pursuant to the Fair and Accurate Credit Transactions Act of 2003 (“FACT”). Consumers can request their reports from all three major credit reporting agencies at AnnualCreditReport.com, where your report will appear on the screen and may be printed out.
Consumers may also call 1.877.322.8228, or write to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
BE SURE TO BRING THE FOLLOWING DOCUMENTS WITH YOU TO YOUR INITIAL CONSULTATION WITH YOUR ATTORNEY:
- (a) Copies of leases, mortgages, deeds and land contracts pertaining to your house or other real estate that you own;
- (b) Current property tax statements, for any real property you have an interest in;
- (c) The most current asset appraisal for your home and all other real property that you own, and all other asset appraisals, such as for jewelry, art and collectibles;
- (d) All certificates of title (originals if available, otherwise copies) for all assets, including vehicles, boats and mobile homes;
- (e) Copies of life insurance policies either owned by the debtor or insuring the debtor’s life;
- (f) Proof of current insurance policies on all motor vehicles;
- (g) Originals of bonds, stock certificates, bank and brokerage statements;
- (h) Any papers relating to past bankruptcies, including Chapter 13 cases;
- (i) Copies of state and federal tax returns for the past two years, and a copy of your last four paycheck stubs;
- (j) Legal papers, lawsuits, and divorce papers (include Divorce Judgments and property settlement agreements);
- (k) Any other papers you have concerning any of your debts;
- (l) Any lease or installment sale agreements for housing (apartment, house, mobile home) or other property (cars, televisions, etc.) that you have signed and that are still in effect or not fully paid;
- (m) Current credit report for each debtor.