If you are considering filing for bankruptcy, you likely want to know what exactly happens once you do so. However if you want to know if filing for bankruptcy is a good idea and whether chapter 7 or chapter 13 bankruptcy makes the most sense, you should consult with a bankruptcy lawyer prior to filing your case.
So what happens after you have filed for bankruptcy?
After you have reviewed and signed your bankruptcy petition and supporting schedules your bankruptcy attorney will file your documents with the local bankruptcy court in the jurisdiction in which you reside. In Washington State, all bankruptcy attorneys must file cases online using the courts Electronic Case Filing System. Once the case is filed, the clerk of court will review the documents that were filed in your case and make sure you have filed all of your required documents. If something required is missing, the clerk will issue a notice of deficient filing and you will need to make sure you comply with the court notice by the deadline listed if you don’t want your case to be dismissed.
Upon the filing of your case, you will also be issued a bankruptcy case number, a bankruptcy trustee will be assigned to your case, and mail will go out to all of your creditors that you listed in your bankruptcy petition from the bankruptcy noticing center. This all happens immediately and from the time your bankruptcy case is filed, the bankruptcy automatic stay will go into effect, stopping most creditors from attempting to collect on a debt. This is what stops wage garnishments and foreclosure actions on your home.
Next, your attorney sometime before your required 341 meeting of creditors will send the trustee assigned to your case your last filed tax return, last 60 days of paystubs, last 30 days of bank history and a declaration form as well as a chapter 13 info sheet if filing for chapter 13. The meeting of creditors is held in about 30-45 days after your case is filed and in the jurisdiction where you live.
At the meeting of creditors, the trustee will ask you basic questions about your bankruptcy petition and financial circumstances. Creditors can show up at the meeting to ask you questions under oath, but that is a rare occurrence. Creditors are more likely to show up if you know you have the possibility of a hostile creditor such as an ex spouse or business partner who is trying to prove that a debt may not be dischargeable or if there is the possibility of making a case for fraud. Usually general creditors such as somebody representing a credit card or medical bill won’t show up. In many cases, if you don’t own many personal assets, your meeting will be less than 5 minutes, however usually about 1o other people are assigned to meet with the bankruptcy trustee at the same time so you should expect to be at court for about an hour.
If you haven’t already completed your required financial management class, you should do so after the meeting of creditors in order to ensure that you will receive your discharge in about 90 days after your case is filed in chapter 7 or at the end of your plan in chapter 13 bankruptcy.
Creditors or the US Trustee have the right to object to your bankruptcy filing or discharge and are given about 90 days in which to do so. In most cases, no objections are filed and the discharge will be issued in 90 days after your case was filed. This is what you are looking for as a bankruptcy judge signs an order stating that your debt has been forgiven if the debt is of a type that is dischargeable. In a chapter 13 case you would be on a 3-5 year repayment plan so the discharge would happen once the plan is completed.
Filing For Bankruptcy and Case Closure
One you receive you bankruptcy discharge, your case can close. However if a chapter 7 trustee is investigating assets or trying to sell assets such as real estate for the benefit of your creditors, your case can remain open, even after your bankruptcy discharge has been issued. Once your discharge is issued however, your credit reports should be updated to reflect that your debts have zero balances and are closed out. You will want to review your credit reports about 30 days after your discharge has been entered to make sure items are being reported correctly. If they are not reporting correctly you can dispute these items with the credit bureaus.
If you happen to get a collection letter or call from a debt collector regarding a debt that was discharged and incurred prior to your case being filed, it is likely because the creditor did not receive notice or it may be a scam, so be mindful of that. Usually scam callers have to do with pay day loans and these calls should be reported to the Federal Trade Commission, FBI or your states Attorney General. If your case was a no asset case, which means the bankruptcy trustee did not take or sell any assets of yours, that debt should be discharged whether it was listed or not.
This is a general guide of what happens in a typical bankruptcy case, however other things you may have to deal with or consider are reaffirmation agreements for secured debts, trustee objections and motions to dismiss proposed plans or filing or defending the rare adversary case if there is a creditor who is behaving badly and not adhering to the rules of the bankruptcy code or if you failed to abide by the rules of the bankruptcy code by acting in good faith. Filing for bankruptcy can be complicated and have consequences but if done properly with the proper counsel you could be debt free and get the fresh start that you deserve. Most debtors are able to purchase a home after about 2 years of a bankruptcy filing and shockingly you will be offered offers for new creditor cards and vehicles almost immediately after filing, so there is hope that you will be able to rebuild your credit scores in short order.
If you live in Washington State and are looking for assistance with filing for bankruptcy, give Symmes Law Group a call at 206-682-7975 to speak to a bankruptcy attorney and learn about your options.