What to Expect Before, During, and After Bankruptcy

Although individual experiences may differ depending on local court regulations, state laws, and the rules of civil procedure, most bankruptcies proceed along similar lines. Here is a chronology of

Bankruptcy Petition
This is an intricate document that includes a description and categorization of the outstanding debts. Because the filing requirements are strict, a lawyer usually prepares the document. Preparing and filing the petition is usually the most difficult part of the process.

The petitions are made under Chapter 7, Chapter 11, or Chapter 13 of the Bankruptcy Code. Chapter 7 discharges individual debts; Chapter 13 allows individuals to pay down debt over time; and Chapter 11 deals with business reorganization. (There are also other forms that deal with farms, railroads, and municipalities.)

Automatic Stay
Once the petition is filed, federal law imposes an automatic stay that stops creditors from taking action to collect debts, including tax debts and court judgments. For example, if the debtor has been served with a lawsuit by a creditor and is expected to appear in court, the lawsuit is stopped by the bankruptcy filing. Within a month, the bankruptcy court will send out a Notice of Filing and a Notice of Stay to the creditors, making it illegal for the creditors to continue trying to collect, although they are allowed to contact the debtor's legal representative. Debtors who are contacted before the notices go out should inform their creditors that they have filed, and give them the bankruptcy court docket number.