What to Expect - A Bankruptcy Chronology
Declaring bankruptcy can be a complicated legal process, but if you have an attorney, it may be relatively quick. But be warned: if you hide assets, or have committed fraud, or are trying to use bankruptcy in a wrongful way, it can be full of unpleasant surprises and frustrating delays. Things happen in the same order in most bankruptcies, and you can at least get a general idea of what's likely to happen. It will also help to know some of the words and phrases that come up in a bankruptcy.
The following chronology gives a general idea of how a bankruptcy filing proceeds. Your action may be different because of differences between local court rules, state laws, and rules of civil procedure. Your attorney can help you understand exactly how your case will fit with this chronology-remember, your attorney works for you, and should clearly explain every step of the legal process.
A bankruptcy case begins with a Petition. The Petition is a complex document, and includes characterization of debts. Typically, because the filing requirements are so stringent, a lawyer will prepare this document. In most cases, preparing and filing your Petition is the hardest part of the process.
The Petition will be under Chapter 7 or Chapter 13 of the Bankruptcy Code. Chapter 7 discharges your debts; Chapter 13 allows you to pay most of them off over time. (There are other Chapters: Chapter 11 deals with business reorganization, and other Chapters deal with farms, railroads and municipalities.)
When you file bankruptcy, federal law imposes an "automatic stay" which prevents your creditors from taking any action to collect debts against you, including court judgments and tax debts, during the pendency of the bankruptcy. For instance, if you have been served with a lawsuit by one of your creditors to appear in court over a debt, the bankruptcy filing will stop this lawsuit.
Depending on where you live, sometime between immediately and a month after you file, the Bankruptcy Court will send out a Notice of Filing and a Notice of Stay to your creditors. This Notice makes it illegal for your creditors to continue trying to collect from you, although they are free to contact your attorney. If you are contacted before the Notices go out, tell the creditor that you have filed and give them the Bankruptcy Court docket number.
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