Bankruptcy Basics

Petition: The Bankruptcy Petition is the document that actually files the bankruptcy case. It is sometimes known as the “voluntary petition.”

Credit Counseling: A person who has not taken an approved credit counseling course is generally not eligible to file for bankruptcy protection. The course is offered by numerous companies and takes about an hour or so to complete. Once completed, the company will issue a certificate of completion. Our law firm will not be able to file a bankruptcy case for you until we have the credit counseling certificate.

Debtor: The person filing for bankruptcy protection.

Creditor Matrix: The Matrix is a list of parties who will get notice of the bankruptcy case and other notices throughout the case. The Matrix consists of the Debtor or Debtors, their creditors, and other parties entitled to notification. The Debtor must file a Matrix when filing the Petition.

Schedules and Statements: The Scehdules and Statements are other forms that a Debtor must file at the begining of a bankruptcy case. They provide information regarding the assets, debts, income, expenses, and other financial information. Other parties may look at these by accessing the Court’s public records.

Automatic Stay: In most cases, the filing of a bankruptcy petition automatically prevents creditors who know about the case from taking actions against the person who filed bankruptcy. Those creditors can no longer file or continue with lawsuits against you. They cannot repossess or foreclose against assets. They cannot create liens on your assets. They can no longer call or send letters to collect their debts.

Trustee: In each case, a trustee will be appointed. The Trustee’s job is to investigate the financial affairs of the Debtor. A trustee in a Chapter 7 case looks for unprotected property to sell and pay creditors. In a Chapter 13 case, the trustee reviews the payment plan, accepts payments, and makes distributions to creditors. In any case, the Debtor has a duty to assist the trustee and comply with reasonable requests from the trustee for documents and information.

Meeting of Creditors: In each case, a meeting will be scheduled with the trustee. The meeting is called a meeting of creditors, but in most cases few, if any, creditors come to the meeting. The Debtors must prove thier identity and answer questions related to the case and the Schedules and Statements filed in the case. The meeting generally takes place within 30 to 45 days after the case is filed, and lasts 10 to 30 minutes in most cases.

Financial Management Course: Sometimes called “Debtor Education,” this course is required in order to be eligible for a discharge of debt. In Chapter 7 cases, Debtors should complete this course as soon as possible after filing the case, and definitely before 60 days after the conclusion of the meeting of creditors. In Chapter 13 cases, the course must be completed before the Debtor completes making all the payments under the Chapter 13 plan. On completiton of the course, a certificate of completion should be issued. You must deliver the certificate to your attorney to be filed with the Court. If the certificate is not on file by the time the Court would have normally issued the Discharge, the Court may close the case without a Discharge (a very bad result).

Discharge: The Discharge may be the most important document in a bankruptcy case. It is the document signed by the Bankruptcy Judge that says your debts have been discharged (erased, wiped out, canceled, …). A Chapter 7 Debtor should generally receive the Discharge about 60 days after the conclusion of the meeting of creditors. A Chapter 13 Debtor should generally receive the Discharge within about 90 days after completing all payments under their approved plan.

Dismissal: Dismissal of a case means that the Debtor is no longer under bankruptcy protection. In general a case can be dismissed if the Debtor does not do all that is required, such as providing documents, appearing at the meeting of creditors, or, in Chapter 13, making all payments required by the bankruptcy plan,