Bankruptcy Timeline

6 Years Before Bankruptcy Filed Prior Bankruptcy Prevents Filing of Chapter 7 You are prohibited from receiving a discharge under Chapter 7 if you received a discharge in a bankruptcy which was filed within the last 6 years.  A discharge may still be granted if the prior bankruptcy was under Chapter 12 or 13 and paid 100% of allowed unsecured claims, or paid at least 70% allowed unsecured claims and the plan was proposed in good faith and was the your best effort. This restriction does not apply to the filing of a Chapter 13 after any prior bankruptcy. 11 U.S.C. § 727(a)(8 & 9) 1 Year Before Bankruptcy Filed Transfer, concealment or destruction of property prevents discharge in Chapter 7 The court may deny you discharge of all debt if you attempted to hinder, delay or defraud a creditor when you transferred, removed, destroyed, mutilated, or concealed property within one year prior to the filing of your Chapter 7 petition. The trustee may recover the property from the person to whom you transferred it. 11 U.S.C. §§ 727(a)(2), 548(a)(1) Payment to Relative or Insider is a Preference A total of $600 or more in money or property which is paid to a creditor that is a relative or insider (certain business associates) within a year prior to filing is a preference. The Trustee may recover preferences and divide the money between all creditors. In Chapter 13, you may be able to prevent the trustee from going after the relative by increasing the amount paid into your plan. 11 U.S.C. §§ 547(b)(4)(B), 547(c)(8), 101(31) 180 Days Before Bankruptcy Filed Dismissal of prior bankruptcy prevents filing Chapter 7 or 13. You may not file any bankruptcy if you filed a previous bankruptcy which was dismissed in the preceding 180 days either (1) on the court's order because of your willful failure to obey orders of the court or to appear in court when required; or (2) at your request after the filing of a request for relief from the automatic stay. 11 U.S.C. § 109(g) 90 Days Before Bankruptcy Filed 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. Payment to Creditor is a Preference A total of $600 or more in money or property which is paid to a creditor within 90 days prior to filing is a preference. The Trustee may recover preferences and divide the money between all creditors. In Chapter 13, you may be able to prevent the trustee from going after the creditor by increasing the amount paid into your plan. 11 U.S.C. §§ 547(b)(4)(B), 547(c)(8), 101(31) 60 Days Before Bankruptcy Filed Debt presumed to be non-dischargeable Debt of $1,075 for cash advances or "luxury goods or services" incurred within 60 days before the Bankruptcy is filed is presumed to be non-dischargeable. Applies to Chapter 7 cases, and to hardship discharge in Chapter 13. 11 U.S.C. §§ 523(a)(2), 1328(b) Bankruptcy Filed Commencement of Case A voluntary bankruptcy is commenced when you file a petition with the Bankruptcy Court requesting protection from your creditors under Chapter 7 or Chapter 13.  A husband and wife may file one petition together and commence a joint case. The filing also puts a stay under 11 U.S.C. §362 into effect prohibiting collection actions. 11 U.S.C. §§ 301, 302, 101(42) 15 Days After Bankruptcy Filed   Deadline to File Schedules and Financial Statement, and Chapter 13 Plan Within 15 days after filing the Chapter 7 or Chapter 13 petition that commenced your case, you must file schedules listing your assets and liabilities, your current income and expenditures, executory contracts and unexpired leases, and a statement of your financial affairs. Bankruptcy Rule 1007(c); see also 11 U.S.C. § 521 In Chapter 13, the Plan must also be filed within 15 days after the Bankruptcy was filed. The plan provides for submission of future income and the treatment of your creditors, specifying when and how much each kind of creditor will receive. Bankruptcy Rule 3015(b) About 18 Days After Bankruptcy Filed Court Mails Notice of Commencement of Case Approximately 18 days after your case is commenced, the court mails a Notice of Commencement of Case to you and to the creditors you have included in your mailing list.  The notice contains meeting date, deadlines for objections to discharge and for filing Proofs of Claims. After Chapter 13 Plan Filed   Chapter 13 only:  Deadline to Notice Chapter 13 Plan In the Eastern District of Michigan, your attorney must mail  your Chapter 13 Plan to all creditors after the Chapter 13 Plan is filed.  30 Days After Bankruptcy Filed   Chapter 7 only:  Deadline to file Statement of Intention Within 30 days after filing the Chapter 7 petition that commenced your case (or before the § 341 meeting if that is earlier), you must file a Statement of Intention indicating whether you will be surrendering or keeping property secured by consumer debt.  If you are keeping secured property, you will need to indicate whether you intend to:  (1) reaffirm the debt and continue to make the payments remaining obligated for the balance of the debt, or (2) redeem the property by immediately paying the value of the property and receive a discharge for the balance of the debt. A copy of the Statement of Intention must be served on the trustee and the creditors named in the statement on or before the filing of the statement. 11 U.S.C. § 521(2)(A); Bankruptcy Rule 1007(c) 30 Days After Chapter 13 Plan Filed   Chapter 13 only:  First Payment Due Under Chapter 13 Plan You must make your first payment under the Chapter 13 Plan within 30 days after the plan was filed. If your plan was filed with the petition which commences your case, your first payment is due within 30 days of the start of the case.  Since the plan must be filed within 15 days after the commencement of your case, the latest date you may start making payments is 45 days after the filing of the case. 11 USC §1326(a)(1) About 6 Weeks After Bankruptcy Filed § 341 Meeting Section 341 (the symbol "§" means section) of the Bankruptcy code requires the Trustee to preside at a meeting of creditors within a "reasonable time."  This meeting is usually held approximately six weeks after Bankruptcy is filed.  You (as the debtor in a Bankruptcy case) are required to attend this meeting and testify under oath, but most creditors do not come to the meeting.  The failure of creditors to attend the meeting does not effect their right to challenge the discharge in a Chapter 7 or to object to the plan in a Chapter 13.  If you do not attend, your case will be dismissed. 11 USC § 341 45 Days after Statement of Intentions Filed   Chapter 7:  Deadline in Chapter 7 to perform under Statement of Intention In Chapter 7, within 45 days after you filed Statement of Intention, you are to perform as you indicated.   In that statement, you were required to state whether you would be surrendering or keeping property secured by consumer debt.  If you were keeping secured property, you would have indicated whether you intended to:  (1) reaffirm the debt and continue to make the payments remaining obligated for the balance of the debt, or (2) redeem the property by immediately paying the value of the property and receiving a discharge for the balance of the debt. 11 U.S.C. § 521(2)(B) 30 Days After § 341 Meeting   Deadline for creditors or Trustee to object to claim of exempt property Creditors and the Trustee have until 30 days after the conclusion of the creditor's meeting under § 341 to object to the property you have claimed as exempt in Schedule C.  While most § 341 meetings are concluded on the same day they are set, it is not unusual for a meeting to be continued to a subsequent date, which will extend the time that creditors have to object. Bankruptcy Rule 4003 60 Days After § 341 Meeting Chapter 7:  Deadline in Chapter 7 for objection to discharge of a particular debt under §523(c) Creditors have until 60 days after the first date set for creditor's meeting under § 341 to file a complaint under § 523(c).  § 523(c) allows creditors to object to the discharge of debts which were obtained by false pretenses, a false representation, or actual fraud; debt from fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny; debt for willful and malicious injury; and debt incurred in a divorce or separation (other than child support and spousal maintenance which are not discharged even without an objection to discharge). The most common objection to discharge of a debt is based on § 523(a)(2).  This section presumes that charges totaling $1,000 or more to one creditor within 60 days before the case is commenced are not discharged, if they are for luxury goods or services, or cash advances. This section also denies a discharge to debt extended because the creditor relied upon a credit application which was materially false. Bankruptcy Rule 4007(c); see also 11 USC § 523   Chapter 7:  Deadline for objection to discharge of all debt under §727(a) Creditors have until 60 days after the first date set for creditor's meeting under § 341 to file a complaint under § 727(a).  § 727(a) allows object to the discharge of all debts because of misconduct including transfer, destruction or concealment of property; concealment, destruction, falsification or failure to keep financial records; making false statements; withholding information; failing to explain losses; failure to respond to material questions; having received a discharge in a prior case filed within the last 6 years. Bankruptcy Rule 4004(a); see also 11 USC § 727(a)   Chapter 7:  Deadline for U.S. Trustee or court to move to dismiss case for substantial abuse under §707(b) Until 60 days after the first date set for creditor's meeting under § 341, the U.S. Trustee or the court may move to dismiss a case in which debts are primarily consumer debts if it finds that the granting of relief would be a substantial abuse of the provisions of Chapter 7. Substantial abuse has been interpreted by a number of courts to mean having sufficient disposable income to pay more than half of your unsecured debt over the next 36 months. Bankruptcy Rule 1017(e); see also 11 USC § 707(b) Chapter 13:  Deadline in Chapter 13 to file all due but unfiled tax returns For cases filed in the Eastern District of Michigan, you must file all due but unfiled tax returns within 60 days after the first date set for the § 341 Meeting. More than 60 Days After § 341 Meeting Discharge entered in Chapter 7 case Court rules require that the discharge be entered "forthwith" after the expiration of the time for objecting to discharge or moving to dismiss the case. The time for those objections expires 60 days after the first date set for creditor's meeting. The discharge is not absolute or final. The trustee can ask that the discharge be set aside if you do not turn over non-exempt property, and for other violations of the debtor's duties. Bankruptcy Rules 4004(c)(1), 4004(a), 1017(e) 90 Days After § 341 Meeting   Deadline for non-government creditor to file its Proof of Claim A creditor, other than a governmental unit, must file its Proof of Claim within 90 days after the after the first date set for creditor's meeting under § 341 in order to share in payments from the estate. Bankruptcy Rule 3002(c) 180 Days After Bankruptcy Filed   Deadline for governmental unit to file Proof of Claim A governmental unit, such as the Internal Revenue Service, must file its Proof of Claim within the commencement of the case in order to share in payments from the estate. Bankruptcy Rule 3002(c)(1) 3 Years from First Plan Payment Minimum length of payments under Chapter 13 Plan Unless all allowed claims are paid sooner, plan payments must continue for the three-year period beginning on the date that the first payment is due under the plan.  During this period, the plan must provide that all of the debtor's projected disposable income is committed to the plan.  (This requirement comes into effect only if the trustee or the holder of an allowed unsecured claim objects; it has been our experience that the trustee will always object.) 11 U.S.C. §§ 1325(b)(1), 1322(d)   Discharge entered in Chapter 13 Upon completion of plan payments the discharge in Chapter 13 is entered. 11 U.S.C. § 1328 5 Years from First Plan Payment   Maximum length of payments under Chapter 13 Plan The maximum length of a Chapter 13 plan is five years beginning on the date that the first payment is due under the plan.  After the third year of the plan, the plan no longer needs to provide that all of the disposable income be committed to the plan. 11 U.S.C. §§ 1325(b)(1), 1322(d)   Discharge entered in Chapter 13 Upon completion of plan payments the discharge in Chapter 13 is entered. 11 U.S.C. § 1328 New BankruptcyLaw: Congress passed sweeping changes to the Bankruptcy Code restricting the availability of a discharge in Chapter 7 bankruptcy and substantially reducing the relief available in Chapter 13 bankruptcy. The bill became effective October 17th, 2005. It's impossible to predict with certainty how the changes reviewed below will be implemented and interpreted by bankruptcy trustees and judges. What is clear is that under the new law there will be far more hoops for the debtor to jump through to get a fresh start. The process will be more expensive for the debtor and the court system, and there will be an extended period of uncertainty as the players work their way through the changes. Eligibility for Bankruptcy Past: The debtor could elect to file either a Chapter 7 or Chapter 13 bankruptcy. Debtors whose debts were primarily consumer debts were subject to scrutiny by the trustee or the judge as to whether they had enough disposable income that permitted them to file Chapter 7 would be a “substantial abuse”. If so, the case could be dismissed or the debtor could convert to a Chapter 13 which repays debts, usually only in part. There were caps on the amount of secured and unsecured debt a debtor could have and file Chapter 13. Current: A "means test" determines whether a debtor can file Chapter 7 bankruptcy. Anyone with an income below the median income for families of the debtor’s size in their state are exempt from the means test. For those debtors above the median income, a presumption of abuse on the part of the debtor, which the debtor has the burden of disproving. In applying the means test, the average income over the past 6 months is used, regardless of present actual income. Mortgage and car payments, and the amount necessary to pay back taxes and past due support, are subtracted. Private and public school expenses for children are limited to $1,500 per child per year. If, after deducting those amounts and the living expenses provided in the IRS’s national collection standards, the debtor could pay at least $6,000 to unsecured creditors over 5 years, the debtor’s only option is Chapter 13 bankruptcy. Barriers to Filing Past: Any individual who was willing to submit to the jurisdiction of the bankruptcy court could file a bankruptcy case. Legal counsel was widely available and subject to fierce price competition. Current: Debtors must obtain approved credit counseling before they can file bankruptcy. Unfiled tax returns must be filed within weeks of the commencement of the case. Lawyers for debtors, but not lawyers for creditors, face personal liability for monetary sanctions if their client is not eligible for Chapter 7 bankruptcy or the facts in the petition are later disproved. The filing fees for bankruptcy cases typically have increased. Legal fees charged by attorneys who remain in the field are expected to increase substantially. Chapter 13 Past: Debtors who elected Chapter 13 bankruptcy were able to cure mortgage arrearages, catch up on back taxes, discharge debts not dischargeable in Chapter 7 bankruptcy, and keep nonexempt assets. Secured debts such as car loans could be reduced to the present value of the collateral. The debtor’s disposable income for determining how much of the pre-filing debt must be repaid was determined by the judge’s assessment of what living expenses were necessary and reasonable for this debtor and his family. Plans ran three years unless the debtor proposes a longer plan, which could not exceed 5 years. Current: Disposable income is calculated using the IRS collection standards, rather than allowing the judge flexibility. Strip down of liens on cars is limited to vehicles purchased more than 2 ½ years before the bankruptcy. Debtors whose gross income exceeds the state median are required to remain in Chapter 13 for five years. It is still unclear how the means test guaranteeing a certain level of repayment to unsecured creditors will intersect with the debtor’s efforts to cure mortgage arrears and prevent foreclosure on his or her home. Multiple Bankruptcies Past: Debtors could file a Chapter 13 bankruptcy immediately following a chapter 7 bankruptcy to pay debts that survived a Chapter 7 bankruptcy discharge. A Chapter 7 discharge was available in the seventh year following a previous discharge. Debtors whose Chapter 13 cases were dismissed short of discharge could refile a bankruptcy case, so long as the new case is filed in good faith. Current: The interval between Chapter 7 discharges has increased by two years. A Chapter 13 may not be filed within 4 years of a Chapter 7 discharge. No change is made on the debt caps for eligibility for Chapter 13, creating a class of debtors with larger debt totals, for whom only the more expensive and complex Chapter 11 bankruptcy is available. Automatic Stay Past: The "automatic stay" uniformly stopped collection actions against the debtor or his property, and requires the creditor who wants to continue enforcing state law rights to get permission from the bankruptcy court. Current: The automatic stay is hedged or conditioned in many circumstances, creating less certainty about immediate protection of the debtor. Filing bankruptcy will not stay acts to collect back support, including revocation of driver’s licenses or professional licenses. Creditors omitted from the official list of creditors are free to continue collection action even if they have actual notice of the bankruptcy. If a prior case is dismissed, the duration or even the existence of a stay is limited in subsequent cases. Landlords are freed to complete evictions, even when the tenant-debtors are paying rent. Discharge of Debts Past: Debts not dischargeable in Chapter 7 bankruptcy included recent taxes, family support and student loans, plus a group of debts that may be nondischargeable if the creditor proves in bankruptcy court that the debt was incurred by various kinds of dishonesty or that the debt was created in a divorce proceeding. Chapter 13 provided for a broader, “ super discharge”, allowing discharge of more kinds of debts in exchange for undertaking a repayment plan. Current: More debts are nondischargeable in Chapter 7 bankruptcy, including privately funded student loans, all debts arising from divorce and debts incurred to pay nondischargeable debts such as taxes or support. Presumptions of fraud have been broadened to include purchases of “luxury goods” of $500 within 90 days of filing or cash advances of $750 or more within 70 days of filing. The Chapter 13 discharge doesn't cover taxes for which the taxing authority didn’t file a timely claim, unfiled tax years or debts tinged with dishonesty. General Observations The proposed law imposes new duties on debtors and their attorneys, and failure to timely perform these duties will result in dismissal of the case or lifting of the automatic stay. Coupled with the new limitations on a second filing, the consequences of mistakes, inattention, or misfortune become far more serious, as the court and the trustee have less discretion to deal with human frailty and intervening circumstances. The presumption that the debtor is entitled to relief from his debts is effectively replaced by presumptions that the debtor’s filing is abusive until the debtor proves otherwise. This overview looks at those aspects of the bill that impact the average debtor. Exactly how it actually will work, or not work, will only become known as debtors, lawyers, trustees, and judges try to apply it to the real world of consumers and their debts. Cathy Moran is a business and bankruptcy lawyer in the San Francisco Bay Area, and was one of the first bankruptcy specialists certified by the California State Bar. Her Web site Bankruptcy in Brief includes much information on bankruptcy.     We are a Federally Designated Debt Relief Agency and Bankruptcy Lawyers who help people file for bankruptcy relief under the Bankruptcy Code.  We do not retain clients on the strength of advertising material alone but only after following our own engagement procedures based on in-person interviews, conflict checks, and retainer agreements. The information contained on this site is intended to educate members of the public generally and is not intended to provide solutions to individual problems. Nor does the use or reliance of information contained on this web site constitute the establishment of a lawyer-client relationship. Readers are cautioned not to attempt to solve individual problems on the basis of information contained herein and are strongly advised to seek competent legal counsel before relying on information on this site.