Chapter 7 Bankruptcy is the most common type of bankruptcy and is also sometimes known as the "liquidation chapter". Most unsecured debts are discharged so that you are no longer responsible for paying those debts. There is no repayment plan, as there would be under a Chapter 13 bankruptcy.
As far as the procedure and a time-line, it usually goes something like this:
Prior to filing your bankruptcy petition:
Once an initial payment is made to your attorney, you may refer your creditors to your bankruptcy attorney's office. This will usually stop creditor phone calls and collection letters from being mailed to you. This is a huge (and mostly overlooked) benefit of using a Bankruptcy Attorney as opposed to trying to file bankruptcy by yourself. Without an Attorney, you'll still need to deal with the creditors yourself and while some people may relish the idea of telling the collections people off themselves, most appreciate the fact that someone else is handling it now.
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Within 180 days prior to filing your bankruptcy petition:
You must complete a credit counseling course. This can be done either online or over the phone. The certificate that you receive for completing the course is only good for 180 days, so make sure you do not let it expire or you will be required to retake the course.
Day 1:
Your bankruptcy petition is filed with the Bankruptcy Court. How long it actually takes to prepare your petition is entirely dependent on how long it takes you to provide the necessary information to your attorney. A Chapter 7 petition can usually be completed within a week, ONCE YOU PROVIDE ALL THE INFORMATION YOUR ATTORNEY REQUIRES.
This bears repeating, your attorney cannot complete your petition unless you provide all the information that is needed. Calling them week after week to see how it's going when you still haven't provided your tax returns, pay stubs, etc is a waste of your time and your attorney's time.
Day 7 through Day 14:
Your creditors will receive notice that the petition has been filed. Once they receive notice, they must immediately cease all collection activities. Any collections made after your petition was filed, have to be returned to you, for instance: If you wages are being garnished, the wages taken from your pay after the petition was filed should be returned to you.
Day 20 through Day 40:
A meeting of the creditors is held. This is commonly referred to as a "341 hearing" and is an opportunity for your creditors to dispute the discharge of the monies owed to them. It's all about giving both sides an opportunity to be heard. In the vast majority of cases, no creditors actually show up for the 341 hearing and no one disputes the discharge.
Within 60 days of the 341 hearing:
You are required to complete a second debtor education course, again, either online or over the phone.
2 to 3 months after the 341 hearing:
The court should grant you a discharge from your "unsecured" debts.
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