Office of Kelly M. Hagan
Chapter 7 Bankruptcy Trustee

Chapter 7 Case Overview

A voluntary Chapter 7 case begins with the debtor receiving a briefing from an approved credit counseling agency, and then filing a petition for relief with the bankruptcy court.  At the same time, or shortly thereafter, the debtor must file a set of schedules which list all of the debtor's assets, liabilities, and creditors; a statement of financial affairs, which covers the past several years of the debtor's financial life; and various other documents.  

 

The filing of the bankruptcy petition triggers two main events.  First, the "automatic stay" is imposed; this stops (stays) most collection actions against the debtor or the debtor's property.  11 U.S.C. § 362.  Additionally, the filing of a bankruptcy creates an "estate."  The estate technically becomes the temporary legal owner of all of the debtor's property.  The Chapter 7 trustee is the trustee for this estate.  Accordingly, the debtor cannot sell or otherwise exercise control over any property of that estate until the trustee has abandoned the property, the case is closed, or there is a court order allowing the debtor to do so.
 

Within days after a case is filed, the bankruptcy court will send a notice of the case to all creditors and other parties in interest.  The notice will identify the trustee assigned to administer the case, and the date on which the meeting of creditors (also known as a § 341(a) meeting or first meeting) will be held.  The trustee typically conducts the meeting of creditors between 20 and 60 days after the bankruptcy petition is filed.  At that meeting, the trustee will ask questions of the debtor and may or may not "continue" the meeting for the production of additional documents or information.


In most cases, the debtor's discharge is issued 60-120 days after the original date of the meeting of creditors and after the debtor obtains additional debtor education from an approved provider.  The order of discharge does not close the case, and the case may remain open for years after a discharge is issued.  The discharge is simply the order which releases individual debtors from personal liability for most debts (not all debts are discharged in a bankruptcy).  Because a chapter 7 discharge is subject to many exceptions, debtors and creditors should consult a lawyer to determine which debts have been or will be discharged. 

 

If the trustee determines there are no assets to distribute to creditors (because all assets are exempt or liened), the trustee will file a "no asset" report.  Approximately 90% of chapter 7 cases involving individual debtors are no asset cases.  The court generally closes the case approximately 45 days after the discharge is entered, unless there is ongoing litigation or some other matter which keeps the case open.

 

If the case trustee determines that there may be assets for the trustee to administer, the case will be considered an "asset case."  It is usually 1-3 years before the typical asset case is fully administered by the trustee and closed by the court.  Additional information regarding asset cases is available here.