What To Do After You Filed Bankruptcy

You have filed for personal bankruptcy and your case is moving forward. Now what?

Once you have filed for bankruptcy, you will need to adhere to any legal processes or payment plans set forth by the bankruptcy court. What these are and how they are handled will differ somewhat, depending upon whether you declared bankruptcy under Chapter 7 or Chapter 13.

Chapter 7 Bankruptcy Procedure

A trustee will be assigned by the bankruptcy court to administer your case and liquidate your nonexempt assets. If all of your assets are found to be exempt or already subject to valid liens, the trustee will file a “no asset” report with the bankruptcy court.

As your case moves forward, you will provide your trustee with financial records when requested. The trustee will, in turn, inform you of all the possible consequences of your declaration of
Chapter 7 bankruptcy, including its effect on your credit report and how the process will advance.

Anywhere from 20 to 40 days after your petition for Chapter 7 bankruptcy was filed, the trustee will hold a meeting with your creditors. You will need to appear at this meeting and answer questions, under oath, regarding your financial situation, property, and other information relevant to your case.

Ten days after this meeting, the trustee will make a report to the bankruptcy court stating whether they believe your case may be an “abuse” according to the means test required under current bankruptcy code. If the trustee says you do not meet the requirements of the means test, your bankruptcy petition will be denied, at which point you may be able to re-file under Chapter 13 or, if not, find another solution to your financial difficulties.

Once everything allowable has been sold off and the income distributed to your creditors according to their classifications, a discharge will be issued that releases you from personal liability for the majority of your remaining debts.

It is important to note that if you didn’t provide adequate financial records, satisfactorily explain any loss of assets, failed to attend required financial management courses, perjured yourself in any way, or otherwise committed bankruptcy fraud, you may be denied a discharge by the bankruptcy court.

Chapter 13 Bankruptcy Procedure

As in a Chapter 7 procedure, an impartial trustee is appointed to administer your Chapter 13 bankruptcy. The trustee evaluates the case and collects debts from you that are then distributed to your creditors.

You are required to bring any overdue payments on your home mortgage current over a reasonable time period, or risk foreclosure even after filing Chapter 13.

You will file your repayment plan with the bankruptcy court at the same time or within 15 days after your petition for Chapter 13 was filed. This plan must be Submitted by the court and provide for payments of certain amounts to the trustee according to a biweekly or monthly schedule. The trustee will use these funds to pay creditors according to the terms of your repayment plan.
Anywhere from 20 to 50 days after you file Chapter 13, your trustee will hold a meeting with your creditors, as described under Chapter 7. After the meeting, you and the trustee, along with any creditors who want to attend, will go to court for a hearing regarding your proposed Chapter 13 repayment plan.

You must start making plan payments to the trustee 30 days after filing Chapter 13, even if your plan hasn’t been formally Submitted yet by the court. You may also have to make secured loan or lease payments directly to these creditors if they come due before your plan is Submitted. Forty-five days or less after the meeting with creditors, a confirmation hearing will be heard at which the bankruptcy judge will decide whether your payment plan is reasonable and meets all the requirements stated in the Bankruptcy Code. Creditors are able to object to any terms with which they disagree and the judge will consider these objections when deciding whether or not to confirm your plan.

If your plan is denied, you may modify it and re-file at a later date, or convert your case to a Chapter 7 filing. There is a chance the court will deny the modified plan or refuse to let you file under Chapter 7 and instead dismiss your case entirely.

Once the payment plan is confirmed, your trustee will begin distributing funds as directed and it is up to you to help make sure the plan succeeds by making your regular payments to the trustee and avoiding any new debts that could interfere with your ability to meet the terms of your payment plan.

You will be entitled to a discharge once you have complete all of your payments according to your payment plan.

If you are unable to complete the payment plan because of changes in your financial circumstances, you may ask the court for a hardship discharge. A bankruptcy attorney can help you determine whether or not your change in circumstances qualifies you for a hardship discharge under Chapter 13.

Article presented courtesy of Todd B. Becker Riverside and Los Angeles bankruptcy lawyers, (800 946-6332), www.toddbeckerlaw.net.