What Happens After Filing Chapter 7

What happens after you file Chapter 7. Read on to learn more!

Your Chapter 7 case typically takes four months to complete and finishes once you receive your final decision or bankruptcy discharge letter. Learn more about the duration of Chapter 7 bankruptcy.

Once you receive your “debt discharge,” or the order that forgives qualifying debt, most filers find that their Chapter 7 case is over in a day or two. After filing for bankruptcy, your case will usually be concluded in four months or less. However, if the trustee needs to sell any “nonexempt assets” or if there is litigation that needs to be resolved, the Chapter 7 trustee may leave your case open for a much longer period of time. After the trustee resolves any unresolved matters, liquidates any assets, distributes the proceeds, and files a report with the court, your Chapter 7 bankruptcy case finally comes to a close.

What Takes Place in Each Case of Chapter 7 Bankruptcy

The same Chapter 7 procedures must be followed by all parties in order to be eligible for a debt discharge. After the creditor’s meeting—the one appearance required of all Chapter 7 filers—you will have to wait for 60 days before the court issues your discharge order. Prior to being granted the discharge, you will, at the very least, perform the following:

Complete the bankruptcy papers by providing complete information about your assets, obligations, income, and expenses.
Submit a fee waiver or pay a filing fee.
Provide 521 financial records to the trustee in bankruptcy (the person in charge of overseeing the case).
Participate in the creditors’ 341 meeting, effectively refute any objections to the discharge, and finish the credit and debt counseling courses (you must finish the first one before submitting your application).
However, the matter is not concluded by the bankruptcy court’s discharge letter or ruling.

A discharge letter or order: What Is It?

The order the bankruptcy court mails at the end of the case is referred to as a “discharge letter” or “discharge order”. The ruling formally “discharges” or “eliminates” qualified debt, which includes personal loans, medical debt, and balances on credit cards and utility bills.

Sixty days following the date of the first 341 meeting of creditors, if everything proceeds as planned, the court will order a Chapter 7 discharge. The order may be postponed for a number of reasons, including the trustee’s need for more time to look into the matter or an attempt by a creditor to block the discharge. However, these issues typically don’t surface unless there is litigation or a failing firm.

When a plan is completed, the court in a Chapter 13 case orders the discharge. Within a few weeks, the trustee often turns in the last set of documents necessary to initiate the discharge order.

The debtor is released from qualifying debt liability upon the discharge. Additionally, it forbids creditors from making an effort to recoup the dismissed debt. A copy of the discharge order or discharge letter is mailed by the court to all parties concerned, including the debtor, creditors, and legal counsel.

It will list the categories of debt that are frequently discharged in bankruptcy rather than the specific obligations that have been discharged. It is advisable to have a copy of the letter on available. Give the creditor the case number and the order’s discharge date over the phone.

When Will Your Bankruptcy Case End Under Chapter 7?

The case will stay open if the court needs to take additional action, and you will need to work with the trustee until the bankruptcy court settles all issues.

What Takes Place If I Own Property That I Cannot Keep?

It is your responsibility to give any non-exempt assets to the trustee handling your case. It is the trustee’s responsibility to collect the nonexempt assets, sell them, and give the money raised to your creditors who have submitted legitimate claims documentation. Locating the property and liquidating it may take the trustee months, or in extreme circumstances, a year, if your case is intricate. Cases over a year old are strongly discouraged by the bankruptcy court.

You may be asked to assist the trustee in gathering the property. The worst-case scenario, which would include losing your nonexempt assets and nearly all of the benefits of the bankruptcy discharge, could occur if you don’t cooperate.

What Takes Place When a Lawsuit Is Filed?

Unless the trustee or a creditor contests your right to dismiss all of your debts, a bankruptcy case usually has no bearing on your general discharge. In spite of this, your case may still be pending after you’ve been discharged. In that case, you have an obligation to assist.

The following are some bankruptcy lawsuit categories that could cause a delay in the conclusion of your case:

Figuring out if a debt is dischargeable. The court will continue to hear your case until it makes a determination about the dischargeability of any debt that you or one of your creditors files a lawsuit asking it to decide
Litigation by the trustee to collect assets. A trustee may occasionally need to sue a third party in order to get access to your nonexempt assets.
For instance. Let’s say a month before to filing, you sold your cousin’s car for half of its original price. The entire worth of the car would belong to the trustee. If your cousin refused to give up the car or pay the full amount owed, the trustee would sue.

For instance. Let’s say you settled your Chapter 7 case with your preferred creditor after making a sizable payment to them. To get the money back, the trustee could sue.

The Final Report of the Trustee

Upon the liquidation of all assets and payment of all claims, the trustee will submit a Final Report to the court. The court will issue a final judgment and the court clerk will close the matter unless any party objects to the final report.

Reopening a Chapter 7 Bankruptcy Case That Was Closed

Even the judge’s ultimate ruling in the case won’t mean that it is over. Reopening the case is sometimes required. Usually, this occurs when an asset that ought to have been included in the case during its active period is discovered by the trustee, a creditor, or the debtor. If the case is reopened, you will still be required to assist the trustee, but the court will not be able to reverse your release more than a year after the case was closed.

The source is located at https://www.nolo.com/legal-encyclopedia/when-does-my-bankruptcy-case-end.html.