In order to initiate a chapter 7 case, a debtor must file complete bankruptcy schedules including but not limited to the voluntary petition, schedule of assets and liabilities, schedule of income and expenses, creditor matrix, Statement of Social Security Number, and the Means Test, referred to as Form B22A, with the Bankruptcy Court. The debtor must also simultaneously file a valid certificate of credit counseling with the Court. A certificate of credit counseling is valid if the counseling course was completed by the debtor within 180 days of the bankruptcy filing and if the counseling course was administered through an agency approved by the Department of Justice (See Credit Counseling Agencies ). The certificate of credit counseling is the debtor’s ticket into the bankruptcy.

Failure to file all required documents could result in the dismissal of the case. The Court allows the filing of a skeleton petition (known as a "bare-bones" filing). However, the balance of the schedules are due within fifteen days of the initial filing. Rather than risk dismissal, it is highly recommended to file all bankruptcy schedules and the certificate of credit counseling at the initial filing.

As soon as the case is filed, the Bankruptcy Court issues a case number.  The first part of the case number represents the year of the filing. The second part of the case number generally is assigned sequentially based on the number of cases filed for that year. The final portion of the case number refers to the judge assigned to the case.  The Bankruptcy Court thereafter issues a notice entitled, "Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines", which contains a wealth of information. The Notice lists the trustee assigned to the case, the date and time of the Meeting of Creditors, and the deadline for creditors to file a complaint objecting to the debtor’s discharge, also known as the discharge date.

The discharge date is a crucial date because the Court will automatically issue a general discharge order shortly after this date unless a complaint objecting to discharge has been filed, the court has extended time to object to the debtor’s discharge, or the debtor fails to file the certificate of financial management course. This date is set by the Court and can only be modified with court approval. Most cases are closed by the Court shortly after the discharge order is issued.

After the bankruptcy filing but before the discharge, every debtor must complete a financial management course, also known as the Debtors Education (DE) course, from an agency approved by the Department of Justice (See Debtor Education Agencies). It is imperative that the certificate of completion of the DE course is filed with the Bankruptcy Court prior to the discharge date. The certificate of Debtor Education is the debtor’s ticket out of the bankruptcy. Failure to file the certificate in a timely manner will result in the closing of the debtor’s case without the issuance of a discharge order. The debtor must then file an appropriate request with the bankruptcy court to reopen the case and pay the court’s reopening fee which is currently $260.00.

The chapter 7 debtor must attend a court hearing known as the Meeting of Creditors or Section 341(a) hearing. This hearing is scheduled about thirty (30) to forty (40) days after the case is filed. This hearing is conducted by the assigned trustee who examines the debtor under penalty of perjury. The trustee reviews each case to verify the representations made by each debtor in his or her bankruptcy schedules, the debtor’s compliance with all filing requirements, and the debtor’s entitlement to chapter 7 relief. The trustee’s examination will specifically address each debtor’s assets. The trustee will attempt to locate undisclosed assets and to determine the liquidation value if any of the debtor’s disclosed assets. The other purpose of the hearing is to allow the debtor’s creditors the opportunity to question the debtor regarding his or her financial affairs.

The Meeting of Creditors is an informal hearing. Debtors will not appear before a judge. However, common rules of decency apply including the prohibition of cell phones, food, and drinks. Each debtor must present his or her social security card and a valid driver’s license, passport, or state identification. A military id, medicare card or correspondence prepared by a government agency, which displays the debtor's social security number, is generally accepted in lieu of an actual social security card. The debtor’s tax return or W-2 will not suffice.

The hearing is essentially a "cattle call" since many cases are scheduled for hearing each hour. The assigned trustee calls the cases in the order he or she chooses. The trustee rarely deviates from his or her calendar, and it can be unwise to ask for special accommodations unless the debtor is handicapped or there is an emergency. Once the trustee calls a case, the hearing on that matter should only take five to ten minutes. Please be aware that if a debtor is represented by an attorney, the trustee cannot call the case unless the attorney is present.

The chapter 7 debtor must provide copies of various financial records to the chapter 7 trustee at least seven (7) days prior to the scheduled Meeting of Creditors. The chapter 7 trustee may refuse to conduct the scheduled Meeting of Creditors, continue the matter to another day, or seek dismissal of the case. The financial documents that the chapter 7 trustee generally requires include but are not limited to:

*Credit counseling certificate

*Statement of Social Security number

*Bank statements for all financial accounts for the three months prior to filing;

*Two most recent years of federal income tax returns;

*Paychecks covering the sixty (60) days prior to filing;

*Divorce decrees and property settlement agreement if divorced within the prior three years;

*Profit and loss statements for any business operated within six months prior to filing; and

*Affidavit of child support if child support is owed.

Chapter 7 Trustees in the Las Vegas area also require the completion of a Trustee’s Questionnaire prior to the scheduled Meeting of Creditors. Sending all required documentation well in advance of the scheduled Meeting of Creditors is strongly recommended. Doing so should expedite and simplify the debtor’s Meeting of Creditors because the Trustee will have had sufficient time to review the debtor’s financial information and to prepare relevant questions.

The typical chapter 7 case takes approximately four months from filing to closure of the case. The typical chapter 7 case is a No-Asset case, which means that the assigned trustee does not intend to collect any of the debtor’s assets for the purpose of paying the debtor’s creditors a portion of the debts owed. Some chapter 7 cases, however, are categorized as Asset cases. Asset cases are cases in which the trustee intends to collect some of the debtor’s assets because they are not protected by law (See discussion of assets and exemptions in Bankruptcy FAQs section). Asset cases may remain open for in excess of a year in order for the trustee to properly administer the bankruptcy estate.

Chapter 7 panel trustees are hired by the Office of the United States Trustee and are appointed by the Court to chapter 7 cases. Please click link for a listing of the Chapter 7 trustees in the Reno and Las Vegas areas. THE CHAPTER 7 PANEL TRUSTEE DOES NOT WORK FOR YOU AND IS IN AN ADVERSARIAL POSITION TO YOU. The trustee collects the debtor’s assets in certain circumstances and sells them to repay some of the debts owed. Some examples of assets that can be collected include federal income tax refunds, excess vehicle equity, 25% of wages and bank accounts, stocks, etc.

Despite the adversarial role that the trustee performs, you are required pursuant to the Bankruptcy Code to comply with the "reasonable" requests of the trustee. 11 U.S.C. §521(3) and (4). Of particular note, each trustee is governed by the United States Trustee Handbook and is consequently expected to conduct the trustee position according to a certain code of conduct. The trustee is required to act professionally and respectfully to all parties in the bankruptcy process. The trustee who fails to conduct himself or herself accordingly may be suspended or removed by the Office of the United States Trustee (If you believe that a trustee has acted inappropriately, you should contact the Region 17 United States Trustee or the Executive Office of the United States Trustee to lodge a formal complaint.) Furthermore, a trustee who fails to maintain professional standards and/or who is not disinterested may be removed for cause by the court pursuant to 11 U.S.C. §324.

The chapter 7 panel trustee is an independent businessman or woman who employs basic business reasoning to the administration of your bankruptcy estate. Chapter 7 trustees earn a fee per case, currently $60.00, plus a commission for all non-exempt assets collected (See Trustee Earnings for yearly compensation reports). The commission schedule pursuant to 11 U.S.C. §§326and 330, is as follows:

     25% of the first $5,000.00 collected ($1,250.00 maximum);
     10% of the next $45,000.00 ($4,500.00 maximum);
     5% of the next $950,000.00 ($47,500.00 maximum);
     3% of the balance

All property owned by the debtor as of the date of filing for bankruptcy relief, or in some cases, within 180 days after filing, become property of the bankruptcy estate. It is the debtor’s responsibility to exempt his/her belongings in order to prevent the assigned trustee from collecting those assets and selling them for the benefit of the debtor’s creditors. An exemption, figuratively speaking, removes the exempted asset from the bankruptcy estate.

A chapter 7 debtor is entitled to exempt certain property according to applicable exemption law.  The exemptions that apply to protect the debtor’s property depend upon the debtor’s domicile over the two and one half period prior to the bankruptcy filing.  The federal exemptions under 11 U.S.C. §522 may apply in limited circumstances.  Nevada exemptions are extremely favorable, generally allowing long-time Nevada residents to protect most if not all assets from creditors and the bankruptcy trustee.

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