What to Expect Once Bankruptcy is Filed

In a Chapter 7 bankruptcy, a Trustee is appointed. The Trustee has a duty to investigate the financial dealings of the debtor. This includes looking for assets, examining transfers, and objecting to exemptions. The Trustee is attempting to collect whatever assets that he or she can find and distribute any funds to the creditors.

The Trustee looks for assets such as cars, bank accounts, transfers to others, including family to see if any money can be recovered for the benefit of creditors.

The Trustee's first examines the debtor's schedules to see what the debtor has disclosed. The trustee will be looking at the listed assets, the creditors that have been paid and the transfers that are disclosed. The trustee will then receive the debtor's bank statements for a period of at least three months before the filing and the debtor's tax return for the previous year.

A tax return is very revealing. It includes interest income and income from other sources. The Trustee will look closely at the returns for anything revealing potential assets.

Debtors should also be aware that the Trustee will be looking for tax refunds. If you always get a tax refund, you should be careful as to when you file bankruptcy.

About 30 days after filing bankruptcy the debtor will attend a meeting of creditors. Creditors generally do not attend these meetings. Rather, the trustee asks a few questions, such as:

why did you file bankruptcy;
did you list all your assets;
have you transferred any assets to anyone in the last 2-4 years;
does anyone owe you money;
have you refinanced your property within the last year;
if so, what did you do with the money.

and other similar questions. The meeting usually takes no more than 10 minutes.

After the meeting of creditors, there is a 60 day period for a creditor, or the trustee to object to the entry of your discharge. As long as you provide all requested documentation to the trustee, the trustee will not normally object to the discharge. Creditors generally object to the discharge unless the debtor took money or bought high priced items with credit cards right before bankruptcy.

Assuming no creditors or the trustee file any objections to the discharge being entered, the debtors discharge will be entered 60 days after the meeting of creditors. The discharge means that the debtor is no longer legally obligated to pay the debts.