A Chapter 7 bankruptcy begins upon filing a bankruptcy petition. Once the petition is filed, the court will issue a case number and an automatic stay is invoked. The automatic stay prohibits creditors from collection activity. This affords the Debtor relief from phone calls, foreclosure, repossessions, garnishment or other collection activity. Approximately thirty days after filing the petition, a meeting is scheduled called the First Meeting of creditors. At this meeting, creditors may attend to ask questions about the case. The meeting is conducted by a Trustee who is appointed by the court. The purpose of the Trustee is to review the schedules and collect any unexempt property or preferences on behalf of the creditors.
Approximately sixty days after the first meeting the court will issue a discharge. During the sixty day waiting period prior to discharge, the creditors can file objections to their claim being discharged. The most common reason for a creditor to file an objection is fraud. If no creditor files an objection which is called an adversary proceeding, all debts are discharged. The Trustee can also file an objection to discharge during the sixty day waiting period. The most common reason for a Trustee to file a complaint to deny discharge is hiding assets or failure to cooperate with the Trustee in providing documents and records. Even if a creditor files an objection to their debt being discharged, the court will still issue a discharge, which will apply to the remaining creditors. Once the discharge is issued creditors are permanently barred from any collection activity. Even after the discharge is entered the Trustee may hold the case open for collection of assets. This usually happens when the Debtor has some asset to collect such as an unexempt tax refund or personal injury action that has not been resolved. The Trustee keeping the case open should have little effect on the Debtor. In general most Chapter 7 bankruptcy cases are completed in approximately ninety days.