The following timeline explains generally what happens before, during, and after a Chapter 7 bankruptcy. Your case might be different, especially if you've filed for bankruptcy before. If this is the case, you should talk to a lawyer before you file the bankruptcy case.
One year before filing bankruptcy
If you try to delay or defraud creditors by transferring, hiding, or destroying property within the one year before the bankruptcy, the court can:
- Deny the Chapter 7 discharge
- Give the transferred property to the other creditors
You also can't pay back a relative, friend or close business associate within the one year before filing for bankruptcy. If this happens, the court can take back the payment and give the money to other creditors.
If you had a prior bankruptcy case dismissed within one year of the time you filed a new bankruptcy case, the automatic stay entered in the new case will be terminated within 30 days. The only way to avoid this is to show that the Chapter 7 bankruptcy case was filed in good faith.
180 days before filing bankruptcy
You must wait 180 days to file a new bankruptcy case if a previous bankruptcy case was dismissed for one of the following reasons:
- You failed to follow a court order or
- You requested a dismissal
Also, within 180 days before filing bankruptcy, you must receive credit counseling from an approved credit counseling agency. A list of federally approved credit counseling agencies can be found on the US Trustee's website.
90 days before filing bankruptcy
You must be a resident of Illinois for at least 90 days before filing for bankruptcy here.
Also, if you pay back any creditor within 90 days before filing for bankruptcy, the court can take that money back.
New credit of $500 or more for luxury goods or services can't be discharged in bankruptcy if you got it within 90 days before filing. Also, a cash advance of $750 or more can't be discharged if you got it within 70 days before filing.
The bankruptcy case is filed
- The bankruptcy estate is created
- The automatic stay goes into effect
- A trustee is appointed
The bankruptcy estate is created the moment you file for bankruptcy. It's made up of all of the non-exempt property you own at the time. Non-exempt property is any property that you are not allowed to keep after bankruptcy. The trustee sells the property of the estate in exchange for wiping out your debts.
The automatic stay goes into effect as soon as you file for bankruptcy as long as you have not had a prior bankrupcty dismissed in the last year. If you had a prior bankruptcy dismissed within the last year, you should talk to a bankruptcy attorney about your options.
The Automatic Stay means that all collection activity by creditors or collection agencies must stop. Lawsuits to collect money or to foreclose on property are frozen and can't continue.
If a creditor still tries to collect a debt, you may be able to sue them.
There are some exceptions to the automatic stay. The stay does not apply to:
- Criminal proceedings
- Child support lawsuits
- Paternity lawsuits
A government agency can still make you obey the law. For example, to clean up property that is a safety hazard.
Secured creditors can ask the judge to lift the stay in some situations. Talk to a lawyer if a creditor tries to lift the automatic stay.
Appointment of the Chapter 7 trustee
A trustee is appointed the moment you file for bankruptcy. The trustee manages the case. The trustee reviews the petition, makes sure it is complete, and then schedules a meeting of creditors. The trustee also gathers the property of the estate, sells it at a public auction, and gives the money to creditors.
14 days after the case is filed
You have 14 days after you file your petition to file the following financial schedules with the court:
- Documents declaring your assets
- A statement of your affairs
Also, within 14 days after you file your case, the court will mail the Notice of Commencement of Case to you and all of the creditors listed in the petition. This notice will give the date for the meeting of creditors, and the deadlines for the creditors to object to the case and file their claims against you.
21-40 days after the case is filed
The court will hold the meeting of creditors between 21 and 40 days after the bankruptcy case is filed. The trustee is in charge of the meeting of creditors.
At least 7 days before this meeting, you must provide the trustee a copy of your most recently filed tax return. You must also provide 60 days worth of paystubs from all sources of income. You also has to give a copy to any creditor that requests it.
The meeting happens within 40 days after you file for bankruptcy. You must attend this meeting and bring a photo ID and social security card with you. You will be asked under oath about the statements in your petition.
However, most of the creditors will not attend the meeting, and there will be no judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you don't attend the meeting, the case is dismissed.
About 30 days after the case is filed
Within 30 days after filing the petition, or before the meeting of creditors, you must file a Statement of Intention. In this document, you tell the court one of two things:
- You want to keep any property that serves as collateral for your debts
- You want to give the property to the creditors
If you want to keep the property, you have two options.
- Reaffirm the debt and continue making all payments on the debt. Reaffirming the debt means you agree to pay the debt, even though it could be discharged or wiped out in the bankruptcy. Reaffirming the debt allows you to keep the property, but you must sign an agreement with the creditor that you will continue to pay the debt after your bankruptcy.
- Redeem the property by paying the fair market value for it. Redeeming property allows you to keep the property by paying the creditor the fair market value. If you owe more than the property is worth, the amount you owe is lowered to the fair market value. Usually, you have to redeem in a single payment, so you have to pay the entire price at one time.
You must tell the court which option you choose in the Statement of Intention. You must also serve a copy of the statement on the bankruptcy trustee and all creditors when filing it with the court.
14 days after the case is filed
Within 45 days after your file your petition, you must file a statement with the court that has:
- A certificate that you received an explanation of the different options available to you under the bankruptcy code
- An itemized statement of your monthly income and
- An estimate of any increase in income or expenses you expect over the next 12 months
45 days after the Statement of Intention is filed
You have 45 days after the Statement of Intention is filed to:
- Give up or keep the property and
- Make all required payments
You must do what you said you would in the Statement of Intention.
30 days after the meeting of creditors
The trustee and creditors have 30 days after the meeting of creditors to object to your exemption claims.
60 days after the meeting of creditors
Creditors have 60 days after the meeting of creditors to object to the discharge of any of the debts listed in the petition and schedules.
Creditors can object to your request to discharge a debt if the debt happened because of:
Also, creditors can object to the discharge of all debts if you have done any of the following:
- Concealment or destruction of property or financial records
- False statements
- Withholding information
- Failing to explain losses
- Failure to answer questions
- A discharge in a Chapter 7 prior case filed within the last 8 years
If there are no objections, you can expect to receive your Chapter 7 discharge a few months after the meeting of creditors.
Even if you get a discharge, the case is not officially closed. The trustee may move to set it aside if you do not turn over nonexempt property or if you commit other bankruptcy violations.
Finally, to get the discharge, you must take a course about personal financial management.
90-180 days after the meeting of creditors
All of the creditors must file their proofs of claim within 90 days of the meeting of creditors. Proofs of claim are documents the creditors submit to the court that say how much money the debtor owes them.
Government entities, like the IRS, that have claims against you, have 180 days after the filing of the case to submit their proofs of claim.