Chapter 7 Bankruptcy Timeline
The law provides for very specific criteria in order to file for Chapter 7 Bankruptcy. The process can take months, but is made much easier with the assistance of a local attorney.
A Prior Chapter 7 Filing Within the Last 8 Years Prevents Filing of Another Chapter 7
2 Years Before Your Chapter 7 Bankruptcy is Filed
What Exemptions Must I Claim in a Chapter 7?
The state exemptions that you must claim in a Chapter 7 bankruptcy are determined by where you lived 2 years (730 days) prior to filing. In an effort by Congress to prevent venue or jurisdiction shopping, you must use whatever state’s exemptions you lived in 2 years before your case is filed.
If you lived in multiple states during this 2-year period, you must claim the state’s exemptions where you lived 6 months prior to the 2-year deadline, or in other words, 2.5 years before your case is filed.
1 Year Before Your Chapter 7 is Filed
Transfers of Property to Defraud Creditors
The court may deny you a Chapter 7 discharge if you have attempted to defraud a creditor by transferring or concealing property within one year before the filing of your Chapter 7 bankruptcy. In these cases, a Chapter 7 Trustee has the power to recover the transferred property from the person(s) to whom you transferred it to, then liquidate it and use the proceeds to repay your creditors.
Preferential Payments to Relatives
If you repay $600 or more to one of your relatives or business partners (also called “insiders”) within one year prior to filing a Chapter 7 bankruptcy, it is known as a preferential payment. The Chapter 7 Trustee has the power to recover preferential payments from the people to whom you made them and use that money to repay your creditors.
Credit Counseling Requirement
180 Days Before Your Chapter 7 Is Filed
Within 180 days before filing bankruptcy, you must receive a credit counseling briefing from an approved nonprofit budget and credit counseling agency. This counseling briefing is a question and answer session with an approved non-profit credit counselor who tries to help you see if there is a way you could repay your debt and avoid bankruptcy. The briefing usually takes around 45-90 minutes and can be done via telephone, in-person, or online. If the course is not completed within the 180 days prior to filing your bankruptcy, your case is dismissed.
The Dismissal of a Previous Bankruptcy Prevents the Filing of a Chapter 7
You cannot file a Chapter 7 bankruptcy if you had a previous bankruptcy dismissed within the preceding 180 days because either:
1. You failed to obey court orders, or
2. You voluntarily requested the dismissal after the filing for relief from the automatic stay by one of your creditors.
90 Days Before Your Chapter 7 is Filed
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Minimum Residency Requirement
You must be a resident in the state in which you are filing for the last 90 days. If you have not resided in the state that long, you can only file in the state where you have resided, or which has been your principal place of business or which has been the location of your principal assets for the majority of the last 180 days.
Preferential Payment to a Creditor
If you repay $600 or more to an individual creditor within 90 days prior to filing your Chapter 7, it is considered a preferential payment. The Chapter 7 Trustee has the power to recover preferential payments from the creditors to whom you made them and use that money to repay your creditors.
Luxury Purchases
If you incur $500 or more of "luxury goods or services" credit from any individual creditor within the 90-day period before your Chapter 7 bankruptcy is filed, the debt is presumed to be non-dischargeable and you may have to repay this debt back.
70 Days Before Your Chapter 7 is Filed
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Credit Card Cash Advances
If you incur $750 or more of credit card cash advances within 70-day period before your Chapter 7 bankruptcy is filed, the debt is presumed to be non-dischargeable and you may have to repay this debt.
The Filing of Your Chapter 7 Bankruptcy
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Your Chapter 7 bankruptcy is officially commenced when your bankruptcy attorney files your petition with the Bankruptcy Court. (Married couples have the opportunity to file one petition together and commence a joint case.) The filing of your Chapter 7 bankruptcy also commences the automatic stay which prohibits your creditors from any further collection actions against you.
When your bankruptcy is filed, the Bankruptcy Court assigns a Chapter 7 Trustee to administer your case and schedules your 341 Meeting of the Creditors.
15 Days After Your Chapter 7 Bankruptcy is Filed
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Deadline to File Schedules and Financial Statement
Within 15 days after filing your Chapter 7 bankruptcy, your attorney must file any bankruptcy schedules that he or she did not file when with your bankruptcy petition. These schedules list your assets and liabilities, your current income and expenditures, any contracts and unexpired leases, and a statement of your financial affairs. In most cases, your attorney files all these required documents when your petition is filed.
Notice to Your Creditors
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