How does the Bankruptcy Process work in Pennsylvania?

If you have thought about filing bankruptcy, one of the things on your mind is how the disposition of your case works. In other words, what takes place between the time you file for bankruptcy and the time you receive a discharge in bankruptcy court.

A bankruptcy case starts with a petition. A petition is a statement of the debtor’s financial affairs. In the petition, the debtor lists all of their creditors, the nature of the claim, and the amount owed.  The debtor will also list all of their property, the source and amount of their income, and a list of monthly living expenses.

Once a bankruptcy petition is filed, the debtor receives an “automatic stay” which prevents creditors from taking any action against the debtor. A trustee is then assigned to the debtors case and becomes the hypothetical “owner” of the debtor’s property. The trustee is responsible for distributing the debtor’s property after the debtor exempts any property that a trustee is unable to sell.

Typically between 20 to 40 days after a bankruptcy petition is filed, the trustee will hold the First Meeting of Creditors (referred to as the “341 Meeting”).  The debtor must appear at this hearing. The creditors attendance is optional. The trustee will request that the debtor testify under oath.  However, no judge is present. The meeting is either recorded or a court reporter is present. The trustee will simply ask the debtor to verify the information in the petition and the meeting takes just about 15 minutes in most cases. If any creditors decide to attend, they may also question the debtor.

After this meeting, creditors have an opportunity within the next 60 days to argue that the debtor should not be entitled to a discharge by the bankruptcy court. Typically, the 341 meeting is the last time the debtor has to appear at a proceeding and the only thing left for the debtor to do is take a debtor education class within 45 days of the meeting. After the meeting, if there are no objections, the debtor will receive a Notice of Discharge.

Leave a Reply

Your email address will not be published. Required fields are marked *