.:Chapter 7 Timeline:.

Day 1 Bankruptcy Filed
Commencement of Case
A voluntary bankruptcy case is commenced by filing a Petition with the Bankruptcy Court. A husband and wife may file one petition together and commence a joint case.

About 1 Week after Bankruptcy Filed
Court Mails a Notice of Bankruptcy Filing
Approximately 1 week after the bankruptcy is filed, the court mails a Notice of Commencement of Case to the debtor and to the creditors included in the list of creditors. The notice contains the date and time of your court hearing (called “meeting of creditors”), deadlines for objections to discharge and the name of the trustee appointed to oversee your case. 

7 Days before "Meeting of Creditors"
Provide copies of tax returns
Not later than 7 days before the date first set for the first meeting of creditors, the debtor shall provide a copy of his or her most recent federal and state income tax return to the trustee and to any creditors that have requested it

About 6 Weeks after Bankruptcy Filed
§ 341 Meeting (Meeting of Creditors held)
A Meeting of Creditors (also known as “Section 341 Hearing”) is usually held approximately six weeks after bankruptcy is filed. The date and time of this meeting is stated in the Notice of Commencement of Case mailed by the court.  Each debtor is required to attend this meeting and testify under oath, but most creditors do not come to the meeting.  Debtors must bring to the meeting a valid picture ID and some proof of their social security number.  The meetings are held once a month in both Rutland and Burlington.  The part of the state you reside in determines where your hearing (meeting of creditors) will be held.  In Rutland Chapter 7 meetings are usually held on the first Monday of the month and in Burlington they are usually held on the first Wednesday of the month.

30 Days after Meeting of Creditors
Deadline for parties to file objection to Debtor's property exemptions
People filing bankruptcy are allowed to claim their property as exempt under the law in order to protect it from creditors.  If the Trustee or a creditor disputes the value of the your property or exemptions, they must file an objection within 30 days after the 341 meeting. Note: If the case has been properly prepared these types of objections should rarely occur.

60 Days after Meeting of Creditors
Deadline for Creditors to object to Debtor's discharge of their debt
Creditors have 60 days after the meeting of creditors to file a complaint objecting 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; and debt for willful and malicious injury.  This deadline applies to objections to discharge of: Consumer debts owed to a single creditor of more than $500 for luxury goods or services obtained within 90 days before a Chapter 7 bankruptcy.

Deadline for Creditors to object to discharge of all debts
Creditors have 60 days after the first date set for 341 meeting to file a complaint objecting 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.

More than 60 Days after Meeting of Creditors
Discharge Order entered
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 the debtor does not turn over non-exempt property, if the debtor fails to perform other duties, or if there were other matters pending which would result in the denial of the discharge.

Final Decree
Your case is not actually closed until the court issues a Final Decree.  The “Discharge Order” and the “Final Decree” don’t necessarily come at the same time, although they often do if a case is a “no-asset” case.  A no-asset case is a case where all of the debtor’s property is exempt.

However, if there is some property that is not exempt, then the bankruptcy case will remain open as long as it takes for the Trustee to liquidate the non-exempt property, distribute the funds to creditors, and file a final report. When the Final Decree is issued the case is closed.

As a practical matter once the discharge is entered a few months after filing the debtor is able to move forward with his or her life.  Even if the trustee has additional duties to complete before he files a final report, this does not usually affect the debtor

.:Remove "Avoid" Liens on Your Home:.

A discharge in bankruptcy voids most underlying judgment against you, but the discharge does not automatically remove a judgment lien filed against your home. However, if you qualify, your attorney will be able to file a motion to avoid or cancel the lien. This is a separate bankruptcy proceeding that must be filed while your main bankruptcy case is open.

A bankruptcy court can remove most types of judgment liens if such liens "impair an exemption" that you would be entitled to under Vermont Law. Although bankruptcy is a federal law, it is largely state law that determines how much property you can keep when you file bankruptcy. Under Vermont law, you can protect up to $125,000.00 of equity in your home from creditors.

Equity means the difference between the value of your home and the amount you owe on it. For example, if your home is worth $200,000.00 and you owe $125,000.00 on it, then you have $75,000.00 of equity in it.

A Vermont creditor who obtains a court judgment against you can create a lien against your home by recording a certified copy of the judgment in the town clerk's office. However, if your equity in the home is less than the $125,000.00 (or possibly up to $139,800.00), then you can obtain an order from the bankruptcy court removing the lien.

.:Remove "Strip-Off" Second Mortgages on Your Home:.

"Strip-Off" is bankruptcy jargon for removing a second mortgage on your home. It can only be done in a Chapter 13 case, not in Chapter 7. Under Chapter 13, if a second motgage is wholly unsecured it may be "stripped" or "avoided" by the Court. However, if the mortgage is at least partially secured it connot be removed. Thus, if you have a first mortgage in which you owe $200,000, and a second mortgage in which you owe $50,000, however due to the adverse real estate market, your $300,000 house has fallen in value to $200,000, you can strip-off the second mortgage because the second mortgage is not secured by any equity in the real estate. The right to strip-off wholly unsecured second mortgages is the prevailing law in the U. S. Second Circuit Courts, which includes Vermont, In re Pond 252 F.3d 122 (2nd Cir.2001).

As such, an approved Chapter 13 plan that purports to turn the second mortgage into an unsecured debt may be approved, thus saving the homeowner significant money and possibly allowing that homeowner to keep his house and afford the remaining mortgage payment.

Examples of Strip-Off applied to a second mortgage

Two examples will illustrate how Strip Off can be applied to a $50,000.00 second mortgage/home equity loan on a $300,000.00 residence.

Example #1
If the first mortgage has a balance due of $295,000.00, then the entire $50,000.00 second mortgage cannot be Stripped Off, because there is $5,000.00 worth of equity (ie. $300,000.00 value minus $295,000.00 first mortgage equals $5,000.00 equity) for the second mortgage to attach to.

Example #2
However, if the balance due on the first mortgage were $305,000.00, the entire $50,000.00 second mortgage could be Stripped Off, as there is no equity in the residence for it to attach to.

Obviously, if a Second (or Third) mortgage can be Stripped Off it can dramatically improve a Debtor's Financial position as they would no longer have to make any payments to that second mortgage holder. In this instance the amount owed to the Second (or Third) mortgage holder would be treated as any other unsecured debt and repaid through the Plan payments made to your Chapter 13 Trustee, often resulting in the mortgage holder receiving only a fraction of the amount actually due.

.:Famous Bankruptcies:.

Bankruptcy can happen to anyone. Throughout the history of the United States there have been many famous people who have filed for Bankruptcy and utilized their right to a fresh financial start.

P.T. Barnum - American circus owner
Kim Basinger - Actress
Frank Baum - Wizard of Oz author
Melvin Belli - Famous Lawyer
Bjorn Borg - Pro tennis player
Lorraine Bracco - Actress (The Sapranos)
Buffalo Bill -Wild West showman
Gary Burghoff - Radar O'Reilly in MASH
Anita Bryant - 1958 Miss America
Samuel L. Clemens ("Mark Twain") - Author
John Connally -Former Texas Governor
Francis Ford Coppola - Oscar winning film writer
Cathy Lee Crosby -Actress
John DeLorean -Automobile designer and entrepreneur
Walt Disney - Film maker
Mick Fleetwood - Rock star
Henry Ford - Automobile manufacturer
William Fox -Co-Founder 20th Century Fox
Red Foxx - Actor
Zsa Zsa Gabor - Actress
Charles Goodyear - American inventor
Ulysses S. Grant - 18th US President
Elizabeth Ward Gracen - Miss America 1982
Bob Guccione -Publisher Penthouse magazine
Merle Haggard - Country music star
Dorothy Hamill - Olympic gold-medal ice-skater
M.C. Hammer - Rock star
Isaac Hayes - Oscar-winning songwriter
H.J. Heinz - Founder of Heinz Ketchup
Milton Snavely Hershey - Founder of Hershey's chocolate
Steve Howe - MLB pitcher
Ron Isley - R&B singer
La Toya Jackson - Rock star
Don Johnson - Actor
Eli Jacobs - Baltimore Orioles owner
Al Jolson Actor -Miami Vice, Nash Bridges
George Jones -Country singer
Chaka Kahn - Rock star
Bernard Kerik - NYC Police Commissioner
Larry King - Talk-show host
Bowie Kuhn - US baseball commissioner
Lorenzo Lamas - Actor
Cyndi Lauper - Rock star (1983)
Jerry Lewis -Comic
Jerry Lee Lewis -Rock n' Roll star
Abraham Lincoln - 16th President of the United States
Meat Loaf - Rock star
Joe Louis - Boxer
George McGovern - Politician
William McKinley - 25th US President
Melba Moore - Singer /Actress
Willie Nelson - singer-songwriter-actor
F. Donald Nixon - Nixon's brother
Ted Nugent - Rock Star
Tom Petty - Rock star (1979)
Gaylord Perry -baseball player
Buddy Post -Lottery millionaire
Randy Quaid - Actor
Rembrandt - Dutch Painter
Burt Reynolds - Actor
Debbie Reynolds - Actress/singer
Mickey Rooney - Actor
Run DMC - Rap Group
Harry Saltzman - James Bond Producer
Derek Sanderson- Hockey Player
Billy Sims - Detroit Lions RB
Anna Nicole Smith - Model/ctress
Lynne Spears - Mother of Britney Spears
Leon Spinks - Boxer
J. Fife Symington - Governor of Arizona (filed while still in office)
Lawrence Taylor - NFL hall of famer
Donald Trump - billionaire entrepreneur
TLC - rock group
Mike Tyson - Boxer
Johnny Unitas - Hall of Fame football quarterback
Oscar Wilde - Poet/Author
James Wilson - U.S. Supreme Court Justice
Tammy Wynette - Country music star