Bankruptcy Indiana

This is just one of several questions I received this week from readers of my Indiana bankruptcy blog having to do with how the bankruptcy process works.  People want to know what the steps are and how long it takes for each step to happen.  In a way, there are two answers to the question: the simple answer and the real answer.

Here’s what I mean: From Day #1 on which a Chapter 7 bankruptcy is actually filed in Indiana (see “Indiana Chapter 7 Bankruptcy Time Line”),  it’s generally Day #60 to Day #90 when it’s “all over”, and the debtor is discharged. 

The steps in that “simple” process include:

1.   Filing the bankruptcy documents with the Court

2.  Notifying creditors the petition has been filed

3.  Holding a creditors’ meeting (also known
     as a 341 meeting) 

4. Selling non-exempt assets and distributing      proceeds to creditors (Most of our clients keep everything they own)

 5.  The court discharges any remaining debt

 6.  The bankruptcy is over

The reason I say there’s this simple answer and then there’s the real answer to the question “How long does a Chapter 7 bankruptcy take?” is that what happens before Day #1 could make all the difference in the world to what the outcome is once the process has begun.  Without question, the most important part of the work I’ve done with my Indiana bankruptcy clients for almost twenty-five years is not during Days #1-60 or #1-90, but in the days before that countdown even begins!

Once you file a Chapter 7 bankruptcy case, you see, you don’t have the right to “un-file” it and do it over, so the paperwork – and the discussion and planning that goes into the paperwork – have to be done right the first time.  Federal and state exemptions can provide positive results that allow debtors to keep property and have the means to start the financial rebuilding process even before the bankruptcy discharge happens. but there are many complications and traps to avoid. Some important details are based not only on the law itself, but on all the court cases and how they interpreted the law. 

Then, a big part of the preparation involves determining the correct value of the clients’ property, and understanding the difference between liquidation value, listing value, and cost. For non-exempt property clients want to keep, there are catch-up payments that need to be calculated. 

For all these reasons, it’s absolutely crucial to have skilled and experienced bankruptcy legal advice.  You know the old carpentry rule, “Measure twice, cut only once”?  That’s how it works in bankruptcy, too.  The preparation needs to be done right before the process actually begins.