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A bankruptcy trustee will look for recent financial transactions see if any are reversable, voidable or claw-back transactions (the money is being ?clawed back? from where it went). They are financial transactions that can be canceled so that the money can be returned to the estate to pay creditors.
Or somewhat more accurately, Chapter 13 can give you more power over and flexibility with certain kinds of creditors, and if you have non-exempt assets. However, if you do not have those kinds of debt or assets, or not much in terms of tangible assets, then Chapter 7 would likely be the faster and easier option.
Here's an overview of the steps involved in filing for Chapter 7 bankruptcy. Find an attorney. ... Attend credit counseling. ... Petition and prepare paperwork. ... A trustee is appointed to your case. ... Meet with your creditors. ... Complete debtor education course. ... Confirm your eligibility. ... Nonexempt property is liquidated.
You likely will need to file a written proof of claim in your customer's bankruptcy case to preserve your right to a distribution, and in a Chapter 7 case, you must do so.
While it may feel odd to pay fees to tell the courts you don't have enough money, you typically have to pay court fees to file for bankruptcy. The filing fee for a Chapter 7 bankruptcy is $338, while the filing fee for a Chapter 13 bankruptcy is $313.