Filing for Bankruptcy

Process to File a Bankruptcy Case

by Mark J. Markus, Attorney at Law
Los Angeles Bankruptcy Lawyer

Filing the Petition:

No matter what chapter of bankruptcy is being filed, Chapter 7, chapter 11, chapter 13 or other, the bankruptcy case is commenced by filing a "petition."   The filing can be either voluntary (done by the debtor) or involuntary (done by creditors).   There are specific additional requirements for an involuntary petition which will not be discussed here.

The petition itself is only a few pages long, but the entire package consists of multiple forms which need to be filed with the court and includes some 50+ pages of financial information, including the new "means test" form in Chapter 7 and 13 cases.  Proper preparation of these forms takes time-usually a few weeks, and in many cases longer-so it's important to begin preparing earlier rather than later.

In most jurisdictions an "emergency petition" can be filed with just the first few pages, a list of creditors and a few other documents, with the balance of forms due within a short time period.

Once filed, the automatic stay goes into effect prohibiting creditors from taking any further actions to collect on their debts.

Mandatory Credit Counseling:

For cases filed by individuals (as opposed to a corporation or partnership) after October 17, 2005, you must obtain a certificate from an approved credit counseling agency before you can file your case.  This costs approximately $50 and can usually be done quickly online.   A copy of any payment plan devised by the counseling service must also be filed with the court.

Plan of Repayment:

In Chapter 11 and Chapter 13 cases, the debtor must file a plan designating provisions for repaying some or all of the debt (depending on various criteria).   The plan approval process is very different in Chapter 13 versus Chapter 11, and is beyond the scope of this article.

Meeting with the Trustee:

In all Chapter 7 and Chapter 13 bankruptcy cases, the debtor is required to attend a meeting with the Trustee assigned to their case.  The Trustee is the person in charge of liquidating non-exempt assets to pay creditors (in a Chapter 7 case) and disbursing payments to creditors (in a Chapter 13 case).  [For more on what an exemption is, see Bankruptcy Exemptions] .

At the meeting, the Trustee will examine the debtor regarding information given in the petition.  This meeting is also known as the "meeting of creditors" and also the "341(a) Meeting."

Time for Objections by Creditors:

Creditors have until 60 days after the date first set for the meeting with the Trustee to file a complaint objecting to the discharge of their debt or, in a Chapter 7 case,  to the entire discharge.

In most cases no objections are filed. However, if a creditor does file a complaint, there will be a trial.

The Trustee has until 30 days after the date first set for your meeting with him/her to file an objection to any exemptions you have claimed. Again, this is rare, but it can happen depending on the specific exemptions you need to use in your case. You should consult with your attorney about the likelihood of this happening in your case.