Chapter 7 Bankruptcy
Chapter 7 bankruptcy is sometimes referred to as a liquidation proceeding because your assets may be sold to repay your creditors. During the bankruptcy, a Chapter 7 bankruptcy trustee will seize eligible assets and sell them. The trustee pays your creditors in order of their priority, which is determined according to the type of debt. For example, child support obligations and debts owed to the government will be paid first. However, many assets are protected from seizure by the trustee, so you may have few assets to sell, or none at all. This makes the bankruptcy case very short; most Chapter 7 bankruptcies are completed within six months.
A bankruptcy discharge releases you from the legal obligation to repay your debts. After you receive a bankruptcy discharge, your debts are no longer legally enforceable and your creditors cannot initiate legal action against you. In a Chapter 7 bankruptcy case, you will typically receive a bankruptcy discharge about 90 days after you file your bankruptcy petition. However, if a creditor challenges your bankruptcy, your discharge may be delayed. Typically, the bankruptcy court clerk will mail you a copy of your bankruptcy discharge or, if you hire an attorney, it may be sent to your attorney’s office. If you do not receive a notice of your bankruptcy discharge, you can contact the bankruptcy clerk’s office to check on the status of your case and request an additional copy of the discharge be mailed to you.
Closing a Bankruptcy Case
The time it takes to close your bankruptcy case will depend on several factors, including the number of assets your bankruptcy trustee must distribute to your creditors and if any additional issues arise that delay the closing of the case. If you have few or no assets to distribute to creditors, your case will likely be closed soon after you receive your discharge. As with your bankruptcy discharge, you can contact the bankruptcy clerk to determine when your case is closed.
Dismissal of the Bankruptcy Case
Your bankruptcy case may also be closed if the judge dismisses your case. A dismissal means the court throws out your request for bankruptcy protection; unlike a bankruptcy discharge, a dismissal allows your creditors to collect your debts. There are several reasons a Chapter 7 bankruptcy case may be dismissed, for example, if you choose not to proceed with your bankruptcy case or do not comply with one of the rules of Chapter 7. The judge can also dismiss your case if she believes you are abusing federal law by filing for Chapter 7 bankruptcy in bad faith. In a dismissal, you will receive notice of a motion to dismiss your bankruptcy case. If you act quickly after receiving a bankruptcy dismissal and correct the issues that caused the dismissal, you may be able to reopen your case by filing a motion to reopen.
Public Access to Court Electronic Records, or PACER, is one way to monitor your bankruptcy case. Bankruptcy cases are available for viewing through the PACER website, and you do not need to be a licensed attorney to have access. It is free to register with PACER; however, if you wish to download your case documents, you may have to pay a fee. PACER charges 10 cents for each page you retrieve from the system. If your charges for the quarter total less than $15, your fees will be waived.