Chapter 7 Handling Your Case in Court

• Library: How to File for Chapter 7 Bankruptcy (Nolo) (2022 Ed.)

CHAPTER 7 Handling Your Case in Court

Routine Bankruptcy Procedures

The Court Sends a Notice of Bankruptcy Filing

Your Creditors Must Cease Most Collection Actions

Attend the 341 Hearing (Meeting of Creditors)

Deal With Nonexempt Property

Deal With Secured Property

Complete an Approved Debtor Education Course

Attend the Reaffirmation Hearing

Understand Your Discharge Order

Amending Your Bankruptcy Papers

Common Amendments

How to File an Amendment

Filing a Change of Address

Special Problems

You Failed the Means Test

A Creditor Asks the Court to Lift the Automatic Stay

The Trustee or a Creditor Disputes a Claimed Exemption

A Creditor Objects to the Discharge of a Debt

You Want to Get Back Exempt Property Taken by a Creditor

You Want to Dismiss Your Case

You Want to Reopen Your Case

For most people, the Chapter 7 bankruptcy process is fairly straight-forward. In fact, it proceeds pretty much on automatic pilot. The bankruptcy trustee decides whether your papers are in order and, if not, what amendments you need to file. Ordinarily, you have few decisions to make.

This chapter tells you how to handle the routine procedures that move your bankruptcy case along, and how to deal with complications that may arise if any of the following occur:

• You or the trustee discovers an error in your papers.
• A creditor asks the court to lift the automatic stay.
• You decide to object to a creditor's claim.
• A creditor objects to the discharge of a particular debt.
• A creditor or the trustee objects to your claim that an item of property is exempt.
• You decide to dismiss your case or convert it to another type of bankruptcy, such as a Chapter 13 bankruptcy.
• You need to reopen your case for some reason after it has been closed.
• Your case is dismissed, and you want to refile it and keep the protection of the automatic stay.

Some of these problems—fixing a simple error in your papers, for example—you can handle yourself. For more complicated problems, such as fighting a creditor in court about the discharge of a large debt, you'll probably need a lawyer's help.

RESOURCE

If you're going to court. If you face any of the special problems covered in this chapter, your first step should be to take a look at Represent Yourself in Court, by Paul Bergman and Sara Berman (Nolo). In addition to valuable information about handling federal court proceedings, this book has a special chapter on bankruptcy court.

Routine Bankruptcy Procedures

A routine Chapter 7 bankruptcy case takes three to six months from beginning to end and follows a series of predictable steps.

The Court Sends a Notice of Bankruptcy Filing

Shortly after you file for bankruptcy, the court sends an official notice to you and all of the creditors listed in your mailing matrix. This notice contains several crucial pieces of information.

Your Filing Date and Case Number

This information puts the creditors on notice that you have filed for bankruptcy and gives them a reference number (your case number) to use when seeking information about your case.

Whether the Case Is an Asset Case or a No-Asset Case

When you filled in the bankruptcy petition, you had to check one of the following two boxes:

[ ] Debtor estimates that funds will be available for distribution to unsecured creditors.
[ ] Debtor estimates that, after any exempt property is excluded and administrative expenses paid, there will be no funds available for distribution to unsecured creditors.

The box you check determines the type of notice the court sends to your creditors. If you checked the first box, your case is known as an "asset case" and your creditors will be advised to file a claim describing what you owe them. If you checked the second box, your case will be known as a "no-asset" case and your creditors will be told to not file a claim. However, they will also be informed that they will have an opportunity to file a claim later if it turns out that there are assets available after all.

How a Routine Chapter 7 Bankruptcy Proceeds
Step	Description	When It Happens
You begin your case by filing bankruptcy papers.	You file the petition and supporting schedules with the bankruptcy clerk, who scans them into the court records.	When you decide to do so. Once you file, most creditors are barred from taking collection actions.
The court notifies creditors that you have filed for bankruptcy.	A notice of your filing is mailed to you and your creditors, stating the date of the 341 hearing and contact information for the trustee.	A few days after you file.
The court assigns a trustee to the case.	The trustee's job is to review your paperwork and take possession of any nonexempt property.	The trustee is appointed at the same time the notice to creditors is mailed.
You provide your most recent tax return to the trustee.	You must give the trustee your most recent tax return but can black out sensitive information, such as your Social Security number and date of birth.	Seven days before the 341 hearing.
The 341 hearing is held.	The 341 hearing is the only personal appearance most filers make. The judge is not there and creditors seldom attend. The trustee questions you about your paperwork. Most meetings last a few minutes.	Between 20 and 40 days after the date you file.
The means test is applied in appropriate cases.	The U.S. Trustee starts a process leading to dismissal or conversion of your case to Chapter 13 if your papers show that you have adequate income to fund a Chapter 13 debt repayment plan.	The U.S. Trustee must file a statement within ten days after the 341 hearing if it appears from the paperwork or information gleaned in the 341 hearing that your income is over the state median and you can't pass the means test.

How a Routine Chapter 7 Bankruptcy Proceeds (continued)
Step	Description	When It Happens
Objections to exemption claims are filed.	If the trustee or a creditor disagrees with an exemption you have claimed, a formal written objection must be filed with the court.	Within 30 days after the 341 hearing.
Secured property is dealt with.	If you owe money on property, you must either redeem or reaffirm the debt if you want to keep the property.	Within 30 days after the 341 hearing.
You attend budget counseling.	You must undergo personal financial management counseling before you can get your discharge.	Within 60 days after the 341 hearing, you must file proof that you completed counseling.
The court holds a reaffirmation hearing.	If you reaffirm a debt and aren't represented by a lawyer, you must attend a court hearing where the judge reviews your reaffirmation agreement.	Roughly 60 days after your 341 hearing.
The court grants your discharge.	The court mails a notice of discharge that wipes out all debts that can legally be discharged, unless the court has ruled otherwise in your bankruptcy case (very rare). The automatic stay is lifted at this time.	Roughly 90 days after you file, and no less than 60 days after your 341 hearing.
Your case is closed.	The trustee distributes any property collected from you to your unsecured creditors.	A few days or weeks after your discharge in a no-asset case; longer in an asset case.

The 341 Hearing Date

As of this writing, all trustees are holding 341 meetings by phone or video conference. While bankruptcy courts are in the process of reopening, dates will vary depending on COVID-19 transmission rates in the local community. Check your court's website for current appearance information.

The notice also sets a date for the meeting of creditors (also called the "341 hearing"), usually several weeks later. Mark this date carefully—it is very important for several reasons:

• You must attend the 341 hearing; if you don't, your case can be dismissed.
• Your creditors must file their claims (if it is an asset case) within 60 days after this meeting.
• Your creditors must file any objections they have to the discharge of their debts within 60 days after this meeting.
• The trustee and your creditors must file any objections they have to your exemption claims.

Contact Information for the Trustee

The notice of filing will also provide the name, address, and telephone number of the trustee assigned to your case. You will probably be able to find the trustee's email address on the notice since most trustees agree to allow the court to contact them by email, which is called "electronic service." If you can't find it, call the trustee's office, get the trustee's email address, and communicate in that way if possible.

Your Creditors Must Cease Most Collection Actions

When the court mails your creditors official notice of your filing, the creditors will learn that the automatic stay is in effect. The automatic stay prohibits most creditors from taking any action to collect the debts you owe them until the court says otherwise.

There are some notable exceptions to the automatic stay, however. Ch. 2 provides detailed information on the automatic stay, including which actions it does—and does not—prohibit.

In addition, the bankruptcy court can lift the automatic stay for a particular creditor—that is, allow the creditor to continue collection efforts. (Lifting the automatic stay is covered in "Special Problems," below.)

Creditors won't know that they have to stop their collection efforts until they receive notice of your bankruptcy filing. The notice sent by the court could take a week or more to reach your creditors. If you need quicker results, send your own notice to creditors (including any bill collectors, landlords, or sheriffs about to enforce an eviction order). A sample letter notifying your creditors is shown below. You can also call your creditors. Be prepared to give your bankruptcy case number, the date you filed, and the name of the court in which you filed.

Notice to Creditor of Filing for Bankruptcy

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