What Happens After You File for Bankruptcy?

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This article was contributed to Leisure Freak by freelance writer Stephanie Caroline Snyder. The decision to file for bankruptcy should be done with full knowledge of what to expect.

Navigating a chapter 7 or 13 bankruptcy can be intense and fear-filled. Uncertainty about what’s to come can affect every aspect of life for you and your family. Bankruptcy has its benefits, but please take the costs into careful consideration as you proceed with the filing. To ease some concerns you may have, read over the key points of what to expect during this time.

Typically after filing your claim, you will:

  • Begin Automatic Stay status
  • Be assigned a court-appointed trustee
  • Complete pre-discharge requirements
  • Discharge your case and begin recovery

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Automatic Stay: Which Debt Collections will be Paused or Stopped?

Immediately after receiving the acceptance of your claim, most of your creditor’s collection efforts, your credit report will transition into Automatic Stay status in the government system. This prohibits creditors from contacting or collecting any capital from debtors. Instead, all transactions are completed by a neutral administrator. Once this is in effect, there are some financial responsibilities that will remain active. Debtors are expected to continue payments for:

  • Support Cases
  • Pension Loans
  • Criminal Requirement
  • Specific Tax Proceedings

However, being listed under automatic stay will cease the collection of most other payments each month until your case is discharged or completed. This pause in collections provides protection from situations that would have been detrimental without taking action. Multiple garnishes from your paycheck, being evicted from your home, and foreclosure on your residential or commercial property are all examples of inclusions under automatic stay protection. Disconnection or interrupted utility services such as electricity, water, and waste management are provided by the city or state.

What Your Appointed Trustee is Responsible For:

The roles of court-appointed trustees alter from cases under each chapter of

bankruptcy filing options. The two most common are chapters seven and thirteen. Whoever the court appoints to delegate your case with your bankruptcy lawyer in NJ or your local area, they should keep your bests interests in mind.

Chapter seven trustees will analyze and collect any property agreed upon and then facilitate sales of those assets, challenge creditors’ claims when needed, and transfer funds from debtors to creditors. Your case’s discharge objectives will also be determined by your assigned trustee.

Alternatively, a Chapter thirteen bankruptcy filing trustee has different obligations. He or she will review your repayment plan and likely make objections to some content within it. Work with them patiently to find a middle ground that will satisfy the court while being manageable with your current income. This trustee is also the person to whom you will submit payments, and who will transfer the funds to creditors.

Being Prepared for the Final Court Meeting:

Before the last meeting with your appointed trustee and the creditors in court, you will be required to attend a credit counseling session and a debtor education course online. This course will provide you with information to increase your financial management skills to avoid having to file for bankruptcy in the future. You will need to visit the government website to find agencies that offer approved services for both the counseling and course. Each event will take roughly an hour to complete. You will receive a certificate of completion from each program to present to the court.

What Your 341 Meeting of Creditors will Entail:

You are required to attend the 341 meetings. Your bankruptcy lawyer will also be present to represent your case. The court-appointed trustee will facilitate the meeting for your case and probably about ten others who are scheduled for that date and hour in the same courtroom. Creditors may have representatives present for the meeting, but they are not required.

The bankruptcy trustee will place you under oath and you will need to verify your identity with both your state-issued ID card and your social security card. The trustee will inquire about the accuracy of documents that have been filed with the court, determine if you have assets that are not protected under exemption qualifications, and discuss any other issues that may affect the administration of the estate.

Questions you will be required to answer:

  • Did you review your bankruptcy schedule thoroughly before signing and do you understand the terms and conditions to which you are signing?
  • Are all of your schedules truthful and accurate?
  • Have there been any changes made to these schedules?
  • Are all of your assets on file with the court?
  • Have you included all of your debts in filing this case?

Additional questions you may be asked include:

  • How were your home and automobile valued?
  • Do you have claims files against other agencies or individuals?
  • Are you expecting to receive an inheritance from a loved one?
  • Have you transferred any of your assets prior to filing?

You will be under oath while the trustee examines your case. Be honest and forthright, and listen to your lawyer’s suggestions when applicable. Additionally, although it is not mandatory for your creditors to attend the meeting, they might show up with a representative to examine you under oath along with the trustee.

Recovering After Bankruptcy:

Filing bankruptcy is a lengthy process even after your case has been discharged. It takes ten years and longer to financially recover from filing. You will likely face many challenges if you need to apply for credit. You face losing assets and reputation. However, bankruptcy allows you a financial fresh start and a chance to correct poor decisions made in the past if utilized wisely.

Maintaining stable residence and employment, keeping a consistent bank account balance, and paying your bills on time every month by making and following an actionable financial plan to stay within your means are the best things you can do to recover successfully. When you decide to begin rebuilding credit, be sure to exercise enhanced caution and make wise decisions to avoid taking on more than your family can endure.

Much thanks to Stephanie Caroline Snyder for contributing to Leisure Freak this informative post regarding a touchy subject and process that many people know little about. 

Stephanie Caroline Snyder graduated from The University of Florida in 2018; she majored in Communications with a minor in mass media. Currently, she is an Author and a Freelance Internet Writer, and a Blogger. 

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