Basic Steps in Your Phoenix and Tucson Bankruptcy
Chapter 7 Bankruptcy – More of the Basic Steps in Your Bankruptcy
Where to File – Residency Requirements
Under U.S. bankruptcy laws you can file in any federal court district where you have had a “domicile, residence, principal place of business or principal assets for the last 180 days.”
For long-time Arizona residents who own a home, business or are employed in Arizona this won’t be an issue. If you have a business elsewhere, have recently moved, or are considering moving, then consulting one of our attorneys may be helpful. Because the laws differ by state, there may advantages or disadvantages to filing in Arizona that are best worked out with a lawyer.
If you just moved in the last six months to Arizona, the law says that if you lived in Arizona longer than you did in the other state, then you are able to file in Arizona. For example, if you moved to Arizona four months ago and prior to that had been in Nevada, you would file in Arizona because you had more days in Arizona than in Nevada in the last six months.
If for some reason you choose the wrong place to file, the court can dismiss your case or move it, if you, the trustee, or a creditor files a motion to move the case. It is also possible for the court to move your case for the convenience of anyone who is a party to the case or in the interest of justice.
What Happens After Filing?
The court will appoint an interim trustee immediately to your case until a permanent trustee is assigned. Usually the interim trustee continues as the permanent trustee. If you sought a waiver of the filing fee or applied to make payments of the filing fee, then the court will usually make that decision shortly after you file.
As we’ve mentioned before, filing the bankruptcy petition means that the automatic stay begins. The automatic stay stops banks, collection agencies, or any other creditor from trying to collect the money you owe them. They must stop calling, sending letters, and moving to repossess or foreclose as soon as you file your case.
The purpose of the stay is for the bankruptcy court to preserve or “freeze” your property and assets until the court has a chance to review and examine it as part of the bankruptcy process. Because it is meant to ensure the court has time to review your assets the stay will remain in effect throughout your case until it is concluded, although creditors can ask to have the stay lifted.
There is an exception to the stay. If you have 2 prior bankruptcy cases that have been dismissed in the last year you will not be granted an automatic stay.
Any property that the trustee could use to sell or lease or that you can exempt from the bankruptcy process must be “delivered” to the trustee. Typically this doesn’t mean that you actually have to turn over your property, but you aren’t allowed to sell or give away your property until the court has made a decision about what will happen to your property.
Timeframe for Meeting of Creditors
Within a few weeks after filing bankruptcy, the court will mail to everyone involved in your bankruptcy (including you, your lawyer, all creditors or anyone else you owe money to, including an ex-spouse) a notice of the automatic stay and the date, time, and place for the meeting of creditors.
The meeting of creditors is usually set for within 40 days after the filing. To give everyone ample time, the meeting must happen at least 21 days after the letter is sent notifying all parties.
Deadlines for Your Creditors
In the notice sent about the meeting of creditors, there will also be deadlines for any actions your creditors may decide to take. One of your creditors may choose to object to any of the property you are trying to keep out of the bankruptcy process. Creditors might also want to object to you receiving a discharge or question whether or not a debt can be discharged by the court.
The deadline for your creditors to file an objection to any property you are asking the court to exempt from bankruptcy is 30 days after the meeting of the creditors.
Many individuals filing Chapter 7 have “no-asset” cases. This means that there is no property available to the court to sell in order to pay off your creditors.
In no asset cases, the court will notify your creditors that they should not file any claims. If for some reason, assets become available to convert to cash, the court would notify your creditors in writing.
The Meeting of Creditors
The meeting of creditors is sometimes referred to as a “Section 341a Meeting.” This refers to the section of the law that requires a meeting to be held where creditors and the trustee ask you, the debtor, questions they may have about your financial situation.
When you hear “meeting of creditors,” you might imagine yourself having to face a room of people representing the banks and credit card companies. The reality is that the meeting of creditors is used by the trustee to ask you questions about your financial situation. These questions and your answers will help him or her carry out their responsibilities as trustee. Creditors will rarely show up at this meeting.
Before the meeting of creditors you will be required to provide the trustee with
- Your federal income tax return
- A government issued picture I.D.
- Your social security number or a written statement that you don’t have one
- Evidence of your current income
- Copies of statements from any bank or investment accounts
- Documentation of any monthly expenses
If you have no documentation for your current income, bank statements or monthly expenses, you provide a statement saying this to the trustee.
At the meeting, the trustee will ask routine questions about information that you’ve provided to her or him as part of the bankruptcy process. Bankruptcy judges are not allowed to attend the meeting of creditors.
The trustee is required to ask you questions to make sure that you are aware of the potential consequences of seeking the discharge of debt. They want to make sure you understand the impact of bankruptcy on your credit history.
It is also required that they make sure you understand that you have the ability to file bankruptcy under a different chapter of the bankruptcy law (such as Chapter 13).
It is also the responsibility of the trustee to let you know the impact of receiving a discharge or your debt. The trustee will also make sure that you understand that a debt that is reaffirmed in bankruptcy means that you will be required to pay that loan back.
The discharge and reaffirmation is a topic that we will cover in depth in another post. Because there are generally three types of loans to be considered in bankruptcy we will be discussing these separately.
For now, it is just important to understand the basic process of a Chapter 7 bankruptcy and the trustee’s obligations with regard to the meeting of creditors.
We’ve just scratched the surface of the process for Chapter 7 bankruptcy. You may have many question regarding bankruptcy and whether you should consider Chapter 7, Chapter 13, or even if bankruptcy is right for you. Consider calling our office to get a free consultation with one of our attorneys to discuss the specifics of your case.