You’ve completed the credit counseling required before filing for bankruptcy and have decided that it’s the route that makes the most sense for you financially. Your work isn’t over the minute you file the required paperwork, though. There are a still a few steps to complete before your case is discharged and the process is completely over.
Automatic Stay
One of the first things to expect after you file for bankruptcy is for an automatic stay to go into effect. Thanks to the automatic stay, the people or companies you owe money to can’t continue to pursue payment of the debt or take any further action against you. For example, your utility company can’t shut off your power and creditors can’t garnish your wages for as long as the stay is in effect. A creditor can ask the court to lift the stay, which means you will become responsible for paying again, but only in certain cases.
Creditor’s Meeting
After you file for bankruptcy, the court will appoint a person to serve as the trustee during the proceedings. The trustee will ask you to provide him or her with certain documents, such as your tax returns. He or she will also schedule a meeting of the creditors. At the creditor’s meeting, the people you owe can ask you questions about your filing. The trustee will also ask you questions about the filing and your paperwork. While creditors usually skip the meeting, you are obligated to attend.
Figuring Out What to Do About Debts
What happens to your debts in bankruptcy depends on which type you file and the types of debt you have. If you file Chapter 13, you will have a repayment plan to follow and will need to start making payments under it no more than 30 days after it is filed. Your creditors will need to file proofs of claim, which lists how much they believe you owe them.
If you’ve filed Chapter 7, it is usually because you don’t have a very high income and don’t have any property of value. In that case, you won’t have to pay anything to the creditors, as long as your debts aren’t exempt. If you have secured debts, such as a mortgage on your home, you’re current on your loan, and you want to keep your home, you will have to continue to make payments on your mortgage to keep the property.
Debtor Education Program
Just as you had to complete counseling before filing, you also have to complete training, in the form of a debtor education program after you file. A debtor education program helps you prepare for future financial success, by walking you through the process of creating a budget, managing credit and making financial plans. Once you go through a program, you receive a certificate to prove it.
Discharge
When your debts are discharged depends on whether you’ve filed Chapter 7 or Chapter 13. If you filed Chapter 7, your debts can be discharged in as little as 60 days. If you’ve filed Chapter 13, your discharge takes place after you’ve made the last payment on your repayment plan, usually between three and five years after your filing.
After discharge, you can start focusing on putting your financial life back together. If you need assistance with credit counseling or putting together a budget, CESI can help. Contact us for more details on how we can help you rebuild after bankruptcy.
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5 responses to “What to Expect After You File for Bankruptcy”
I found it interesting how you mentioned how you will have a repayment plan to follow if you file for chapter 13 bankruptcy. A friend of mine wants to file for bankruptcy but feels as if he can pay off the debts within a month. I will be sure to pass this information on to him so he can assess all of his bankruptcy options!
Hi Ethan – a bankruptcy attorney will absolutely be able to give your friend the best information about his unique situation. Best of luck to him!
That’s good to know that you have a whole plan laid out for you if you file for bankruptcy. If I ever have to end up filling for bankruptcy, I’ll have to keep this in mind. That’s a good idea to have a debtor education program so that you can be better at handling your debt in the future.
I never knew that the court would appoint a trustee to a person after filing bankruptcy to go over documents and schedule a meeting with creditors. My husband’s company isn’t doing very well financially, so he and his partner are considering filing for bankruptcy, but we weren’t sure what the process would look like. It makes sense that there would be a meeting with creditors to go over all the details. We’ll have to see if there’s a good bankruptcy lawyer in our area to help him through the filing process.
I liked that you said that one thing to do when you are going through the bankruptcy process is to hire a professional to help you figure out your debts. I would imagine that an experienced professional would be able to give you the best advice on how to handle your situation. I would be sure to hire a financial advisor in order to complete the bankruptcy process correctly and with little stress.