When you file your petition, the “automatic stay” may take effect depending upon whether you have had more than one bankruptcy case pending and dismissed in the year before filing the current case. The automatic stay prohibits creditors from taking collection action against you or your property. The bankruptcy court issues a notice to all creditors advising them of the filing, the case number, the automatic stay, and the name of the trustee assigned to the case (in Chapters 7, 12, and 13). The notice also tells creditors the date of the meeting of creditors (the “341 meeting”) the deadline for filing objections to the debtor’s discharge or to the dischargeability of certain debts, and whether and where to file claims. The information in the notice varies with the Chapter of the case. All debtors must appear at the meeting of creditors or the case may be dismissed.
In an individual’s Chapter 7 case, creditors generally have 60 days from the first date set for the meeting of creditors to object to the debtor’s discharge or the dischargeability of certain debts. If the deadline passes without any objections to the debtor’s discharge being filed, the bankruptcy court may issue the discharge order. Other matters that may prevent or delay the discharge are: certain pending reaffirmation agreements, if a hearing is required and has not been held, the failure to file the verification of completion of a Personal Financial Management course and other circumstances as listed under Section 522(q) of the Bankruptcy Code. If any objections to the dischargeability of debts are filed, they will be heard by the court, but will not stop the entry of the discharge as to other debts. If there are no non-exempt assets with equity above the liens against the assets from which creditors can be paid, the Chapter 7 trustee will prepare a report of no distribution, and the case will be closed. If non-exempt assets exist, the Court will set claims deadlines and notify all creditors to file their claims. The Chapter 7 trustee will collect the assets, liquidate (sell) them, and distribute the proceeds to creditors. When the assets have been completely administered, the trustee files a final distribution report and the Court will close the case.
In a Chapter 13 case, a plan is filed, and creditors are given the opportunity to object to the plan. If no objection is filed by the creditors or the Chapter 13 trustee, the Court may confirm the plan. The debtor(s) then make payments to the Chapter 13 trustee under the plan for three to five years. The Chapter 13 trustee will distribute the proceeds of the plan payments to creditors until the debtor completes the plan or the Court dismisses or converts the case to another Chapter. Upon completion of the Chapter 13 plan, the Court issues a discharge order, the Chapter 13 trustee will prepare a final report, and the case will be closed. A discharge will not issue if the debtor(s) fails to verify that they have made all post-confirmation Domestic Support Obligation payments and filed the verification of completion of an Instructional Course in Personal Financial Management.