Chapter 7 Bankruptcy Process: An Overview

Many people envision the bankruptcy process as a complex maze of legal proceedings before a bankruptcy judge. While properly completing the massive stack of documents that constitute a Chapter 7 or Chapter 13 bankruptcy can be intimidating, the process is fairly straightforward if you have a qualified Orange County bankruptcy lawyer to prepare your petition and schedules and appear with you before the bankruptcy trustee. The knowledgeable Southern California attorneys at Shakoori Law Office know that many people are intimidated by the legal process. We have provided this overview of a Chapter 7 bankruptcy to help demystify the process. For a more detailed explanation of the Chapter 7 or Chapter 13 bankruptcy process, call us at 800-578-0922 today for a free no obligation initial consultation.

Required Credit Counseling: The 2005 bankruptcy reforms added a requirement that a debtor receive mandatory credit counseling prior to filing a bankruptcy petition. This is a brief program that may be taken online.

File Bankruptcy Petition: Where an emergency situation applies like a pending trustee sale of your home, an experienced Orange County Bankruptcy attorney may perform an emergency filing which involves only filing a few documents but triggers the protection of the automatic stay. If no such emergency exists, your bankruptcy lawyer will generally submit a complete bankruptcy petition with all schedules. You will be required to submit tax returns and proof of income documents, which may be done at this time or shortly thereafter.

341 Meeting of Creditors: The bankruptcy trustee will send a notice to your listed creditors and you or your attorney scheduling this informal hearing. The 341 meeting of creditor typically occurs within 20-90 days of filing your petition. The informal hearing is typically very brief and informal. It also rare that any creditors will actually attend with the exception of someone from your mortgage company if you own a house that is financed. The trustee may ask questions about the information provided on the schedules of assets and debts or about your income.

Eligibility Confirmed: The trustee will determine that you qualify for Chapter 7 under the means test. If your income is under the median income for California based on income level and size of your family, then you will qualify under the means test. If your income exceeds that threshold a further analysis of your disposable income is conducted to determine eligibility. An experienced bankruptcy lawyer can help you maximize your expenses and reduce your disposable income so that you are more likely to qualify for a Chapter 7. If you do not qualify, you may be able to seek Chapter 13 relief.

Property Distribution (if applicable): As a practical matter, most Chapter 7 bankruptcies are "no asset Chapter 7s," which means there is no exempt property to distribute to creditors. If there is exempt property subject to distribution to creditors, it is handled prior to discharge. Similarly, collateral on any secured debt where the obligation is not being reaffirmed is also surrendered prior to discharge.

Financial Management Course: You must take this course within 45 days after the 341 meeting of creditors to receive a bankruptcy discharge. The course is a simple course, which is about 90 minutes and may be taken online. A certificate of completion must be provided to the trustee before a discharge can be granted.

Final Hearing: This hearing is very brief and merely to inform you that your discharge has been granted.

While this overview of the Chapter 7 bankruptcy process may be helpful, the best way to learn about the process is to consult with a qualified Orange County bankruptcy attorney. At the Shakoori Law Office, we will answer your questions and help you find the best solution to your financial challenges. We know that in tough economic times like these many people find themselves facing devastating financial challenges. We are here to help. The Shakoori Law Office is conveniently located in Santa Ana, California and assists clients throughout Southern California including but not limited to the following: Santa Ana, Tustin, Fullerton, Orange, Anaheim, Irvine, Newport Beach, Costa Mesa, Fountain Valley, Huntington Beach, Westminster, Garden Grove, Orange, Buena Park, Placentia, Yorba Linda, Irvine and throughout Los Angeles, Riverside and San Bernardino Counties. Call today for your no obligation free initial consultation 800-578-0922.

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