One of the most common questions that I am asked as a Seattle bankruptcy attorney is what happens after filing bankruptcy? This is a loaded question and how things transpire after filing bankruptcy will depend on each case individually however I have compiled a list of what most debtors can expect. I discussed this topic on 1150AM KKNW recently and you can listen to the full audio here:
(1) Do I have to Go to Court After Filing Bankruptcy?
Most Consumers who file bankruptcy will need to go to court one time for a 341 meeting of creditors. This meeting generally lasts 5 minutes although you should plan to be at court for about an hour. The purpose of the meeting is to allow the bankruptcy trustee to ask you questions about your assets and financial circumstances. Creditors may attend however that is usually unlikely unless a creditor wants to question you about your business affairs in order to prove some sort of fraud or ask about assets.
(2) Your Credit Will Improve Over Time After Filing Bankruptcy
When you file for bankruptcy, you must list all of your debts, collections, taxes etc. in your bankruptcy petition. Most debt will be discharged (eliminated) once you receive a bankruptcy discharge from the bankruptcy court in about 90 days after filing in a chapter 7 case or after your plan is completed in a chapter 13 case. One of the major factors affecting your credit score is how much unsecured debt you have and how much of your available credit lines are you using. If all your debt goes down to zero, then you are no longer maxing out your credit and your scores will likely rise if they started out lower. Yes it is true that a bankruptcy will show up on your credit report and can stay they for up to ten years, but for most 1 negative items is better than many other debt related negative items appearing on a credit report. After receiving a bankruptcy discharge, consumers should review their credit reports to make sure everything is reporting correctly, showing closed accounts and zero balances. It is advised post filing that you sign up for a secured credit account or two that will report positively to your credit after your case is filed and you can build up your scores from there.
(3) Will I be able to buy a car, a house or obtain credit after filing bankruptcy?
Yes! Once of the most common comments I get from clients after filing for bankruptcy is “Why do I get so many offers to buy cars?” The answer is now that you have filed for bankruptcy, your credit score has likely improved and creditors know you cannot file for bankruptcy for several years. When you file for bankruptcy the information is public record which is how auto dealers may obtain your information to send you mail. The interest rate on the vehicles will of course vary but rest assured you will be able to get a vehicle post filing and most people get to keep the vehicle they already have should they choose to do so. In terms of obtaining a home loan, most lenders will loan to you after it has been 2 years since you have filed for bankruptcy. It should be noted that some apartment complexes do not like renting to bankruptcy filers but usually you can find somebody that will work with your situation.
(4) How Do I deal with non dischargeable debts after filing bankruptcy?
Some consumers have debts that are not dischargeable in bankruptcy. These can include child support, some types of taxes, court fines, student loans or speeding tickets (Dischargeable only in Ch. 13). For these types of debts, chapter 13 bankruptcy can allow for you to pay off these debts over a period of 5 years. Outside of bankruptcy it is bet to negotiate a payment plan with the individual creditor and see if you can budget the payments to something that you can afford.
(5) What if a Creditor Contacts Me After Filing For Bankruptcy?
Creditors are forbidden from contacting consumers after filing for bankruptcy due to the bankruptcy discharge order. With that said if you have a debt that is not dischargeable then a creditor can contact you regarding that debt and you should set a payment plan per #3 above. If a creditor is contacting you post bankruptcy discharge when the debt should have been dischargeable it is likely they did not receive notice for one reason or another. You should contact the creditor and provide them with your case number and filing date. If they require additional information you can mail or fax them notice of the discharge and 99% of the time this will clear up any confusion.
(6) What if a Creditor is Still Reporting Negative Items on My Credit After Filing Bankruptcy?
If a Creditor is still reporting negative items on your credit report or an account is reporting as having a balance when it should show zero after filing bankruptcy you will need to dispute these items with the creditor and the credit bureaus reporting the negative items. You should always send your disputes in writing through the mail in order to have any possible claims in the future. Under the Fair Credit Reporting Act, if mis information continues to be reported you may have a claim and be entitled to $1,000 in damages.
If you live in Washington State and are considering filing for bankruptcy, give Symmes Law Group a call at 206-682-7975 to learn about your options.