Steps of a Chapter 7 Bankruptcy Case
1. Meet with a Bankruptcy Attorney
Your bankruptcy attorney can help you to decide which choice would be best for your personal financial situation: a Chapter 7 or Chapter 13 bankruptcy, or a non-bankruptcy option such as credit counseling or debt negotiation.
2. Attorney Analyzes Your Debts and Income
Your attorney will perform a detailed analysis of your debts and income to determine whether repayment of your debt through a Chapter 13 plan is possible and how much debt the bankruptcy laws require you to repay.
3. Take Credit Counseling Course
Before the court allows you to file bankruptcy, you must obtain a certificate showing that you have completed credit counseling. Your attorney can help you obtain this certificate.
4. Attorney Prepares and Files Debt Repayment Plan
Your attorney drafts a debt repayment plan that is filed with the bankruptcy court for approval. Your repayment plan describes your debts and the amount that will be paid to each creditor. You make your first payment to the trustee approximately 3 weeks after the plan is filed, before the court even decides whether to approve your repayment plan.
5. Court Decides Whether to Approve Debt Repayment plan
About 30 days after your plan is filed, the court holds a hearing and reviews your repayment plan in court, with your attorney and, usually, some or all of the creditors' attorneys present. The court then decides whether to confirm (approve) your repayment plan.
6. Payments Made For 3 to 5 Years
Once your plan is approved, you continue to make payments on your debt to the bankruptcy trustee every 30 days. The trustee distributes the money to your creditors based on your repayment plan. You must be very careful to make all required payments.
Your repayment plan lasts between 3 and 5 years depending on your financial situation. The time depends on your "current monthly income," which is calculated by averaging your income for the six months before you filed for Chapter 13. Your income is then compared to the median monthly income for households of the same size in California. If your income is more than the median state income, your repayment plan must last for 5 years. If it is less, you may use a 3 year repayment plan, if the court approves.
7. Discharge
Once your repayment plan has been completed, any remaining unsecured debts eligible for discharge will be wiped out. Before receiving a discharge, you will be required to complete a session of budget counseling.
Call San Diego Law Firm for Bankruptcy Help
If you have a regular income but are struggling with your debts and facing debt collectors, a Chapter 13 plan may be a good choice for you. Please call San Diego Law Firm today to schedule your fee consultation and find out if a Chapter 13 bankruptcy is right for you.
How to Contact San Diego Law Firm
We handle matters throughout California, and new clients are always welcome. For more information or to make an appointment, please contact us either by:
Telephone: (619) 794-0243
E-mail: contactus@SanDiegoLawFirm.com
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