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How Does The Bankruptcy Process Work?

The Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and local rules of bankruptcy govern the procedural aspects of the process.

There is a bankruptcy court for each judicial district in the country. The court official with decision-making power over federal bankruptcy cases is the United States bankruptcy judge. Much of the bankruptcy process is actually conducted by a trustee who is appointed to oversee the case.

A Chapter 7 bankruptcy begins with the filing of a petition and several forms with the bankruptcy court in your area. The forms typically ask the petitioner to describe all your assets, debts, income, expenditures, as well as other personal background and financial information. The filing of the petition stops the petitioner’s creditors from suing or taking any steps to collect a debt.

Shortly after filing, the petitioner must attend a short informal hearing with the trustee and the petitioner’s creditors to answer questions regarding assets, debts, income, etc. After the hearing, the trustee sells the property that can be taken from the petitioner and splits the proceeds among the petitioner’s creditors. At the end of liquidating the property, the court schedules a final hearing and discharges the petitioner’s debts. The effect of this is that the petitioner no longer legally owes creditors and they are forbidden from trying to collect any unpaid amount.

A Chapter 13 case begins by filing the same papers as under a Chapter 7. In addition, you must file a plan for repaying your debts. You send your payments directly to the trustee The trustee then pays your creditors according to the terms of the court-approved plan. When you have repaid your creditors according to the plan, a court hearing will be held and you will be discharged.

If you or a loved one is in need of legal assistance, call Sluka & Minasian, LLC at (201) 798-6500 or submit an online questionnaire.

Federal Law designates this firm as a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.