If you’re considering filing for Chapter 7 or 13 bankruptcy, you might be wondering what happens after your case is filed. It’s an important distinction to make: once you’ve taken the step of filing for bankruptcy, a number of factors come into play.
Your Initial Situation with Creditors
Once you file for Chapter 7, you’re assigned a case number and bankruptcy trustee. The trustee will oversee your case, review your documents, and may ask for additional documentation depending on what was initially submitted. The trustee will administer the Meeting of Creditors, which is a meeting your creditors may attend for the purpose of asking initial questions regarding your case. Their involvement will depend on how much you owe and the type of debt that you have. For example, business creditors are more likely to attend the meeting to inquire as to the status of collateral and insurance; ex-spouses may attend the meeting to ask about unpaid property settlements or support; creditors for typical consumer debt generally do not attend the meetings unless there has been a long history of non-payment, or the creditors suspect some sort of fraud has been committed.
What is the ‘Automatic Stay’?
Once your Chapter 7 or 13 case has been filed, you’ll be granted an “automatic stay,” which offers protection from all creditors and others to whom you owe money. They cannot take collection action against you or against your property and any wage garnishment must stop.
Credit cards will be shut down, including any cards that have a zero balance. It’s worth noting that recent national legal action concerning student loan debt has now opened up the possibility that this particular debt could be discharged through bankruptcy.
Filing for bankruptcy will initially lower your credit score and the action will remain on your credit report for 10 years in the case of Chapter 7 or an uncompleted case and 7 years for Chapter 13.
Bankruptcy Filing Fees
There are fees associated with the filing and any legal fees that your bankruptcy attorney may charge. The filing fee can be paid at once with the filing of the case or in installments if it is difficult to pay the filing fee upfront. The court will dismiss your case if the filing fee installment payments are not made on time and in full. The attorney fees for the filing of Chapter 7 are generally due prior to the filing of the case, while the attorney fees for Chapter 13 can be paid as part of the monthly plan payment.
The court requires you to take a credit counseling course prior to the filing of the case to help you determine if bankruptcy is the correct choice for your situation. After the case has been filed, you are required to take a financial management course to help you manage through the bankruptcy and as you rebuild after.
If you’re ready to file for a Chapter 7 or 13 bankruptcy, you should definitely enlist the advice and consultation of a knowledgeable bankruptcy attorney. The team at Natural State Law, PLLC understands the overwhelming nature of the process and are the professional source Little Rock clients trust. Call us today at 501-916-2878 to schedule a free consultation.