What Happens After My Bankruptcy Papers are Filed?
What Happens After My Bankruptcy Papers are Filed?
After your bankruptcy papers are filed, the court will send a Notice of the Appointment of a Trustee and Notice of the Section 341(a) Meeting of Creditors. Your next step is to make sure you keep any paycheck stubs, direct deposit stubs, bank statements, etc. We will let you know about any other payments that need to be paid within a month or two after your case is filed. Your actual chapter 13 plan payments generally begin within 30 days after you file your petition. We sign you up for the credit counseling course and you will need to complete this course within a specified period of time.
We also want to make sure you understand your rights under the automatic stay of the bankruptcy. You should remember that once you file, creditors are not allowed to contact you seeking payments and if any do, you have steps you can take to inform them of your bankruptcy filing and report them if they continue to contact you. Sometimes creditors may not have received the notice yet when they contact you.
If for some reason there is a foreclosure, repossession, or utility shut-off that is expected to happen soon, we will work with you to ensure that notice is given to those creditors to stop any actions they might be planning to take. If a creditor still takes action against you, we will work with you to remedy the situation using your legal rights under the automatic stay provision of the bankruptcy laws.
We also need to make sure that you consult with us before making payments on any loans you have or opening any new credit lines. If you need to move after filing, make sure you tell us and give us your new address. If you come into an inheritance, a property settlement, or insurance pay outs, you need to make sure and let us know so that we can amend the schedules we submitted to the court in your filing. Failure to report these kinds of events can jeopardize your bankruptcy case.
If we have filed a chapter 7 bankruptcy for you, remember that you cannot get rid of, give away, or sell any non-exempt property. The trustee has the right to demand and retrieve that property at any time even if you have disposed of it.
There are times when you may have missed some information or forgotten about an account or debt while we filled out your bankruptcy paperwork. We can amend the filing at any time before the case is closed. We will prepare the amendment and you will verify it before we submit it to the court. We also notify the trustee and any other person or entity affected by the amendment.
The Financial Management Course
As part of the requirements to receive a discharge, you will also complete a personal financial management course. In a chapter 7 case this must be completed within 45 days after the first date set for the 341(a) meeting of creditors. In chapter 13, you must do this no later than the date of the last payment in your plan. Sometimes clients will need to petition for a hardship discharge during their chapter 13 plan. If this is necessary, you still need to complete the financial management course before we file the motion for the hardship discharge.
The financial management course will cover topics such as budget development, money management, how to use credit cards, and is a minimum of 2 hours. If you have file a chapter 7 bankruptcy, you might consider taking the course sooner rather than later, as your discharge won’t be entered until you have completed the course.
Seven days prior to the meeting of creditors, you will need to provide to the trustee a copy of your tax return for the most recent tax year before you filed bankruptcy. If any creditor has requested a copy of your tax return, then we provide it to that company/person involved in your bankruptcy case, if they properly make the request for the tax information.
For example, the creditor who requests the tax return is required to make a “timely” request. The company or person should have made this request prior to when we send your tax return to the trustee. So if there is any concern about a creditor asking for your return, we can submit the return to the trustee right after starting your case. The trustee is not allowed to disclose your tax return information to any third parties. If we fail to give your return to the trustee or to a creditor who requests it before we’ve submitted it to the trustee, your case can be dismissed.
If you file any returns during your bankruptcy case, for example past year returns that had not been filed before, or for a tax year ending while your bankruptcy is pending, the trustee, the court, or any interested party to the case can request copies of those returns. If the request is made according to proper procedures, then we comply with the request.
Because tax returns have important confidential information, such as social security numbers, names of dependent children, we will use the legal means necessary to safeguard your personal information when responding to a proper request for your tax returns.
For chapter 13 bankruptcies, the court, trustee, or other party (such as a creditor) may request that you provide annual statements of income and expenses. This statement would include amounts and sources of your income, identities of anyone who supports the household you live in or any dependent children you have, and your income and expenses for the previous year, including your monthly income.
As part of our representation of you, we will ensure that you exercise all of your rights. You may want to keep certain property that is not exempt. You have the right under chapter 7 to “redeem” certain personal property. When you redeem property, you pay the value of the property to the company or person who holds the loan on the property. We may also avoid having to transfer exempt property that has a loan attached to it.
There may be times after we file your bankruptcy where a creditor makes a claim of a priority or secured debt. If a creditor makes a claim, it is important for us examine the validity of the claim and decide if we will object to the claim. It is possible that the value of secured property is lower than a creditor is claiming, or perhaps the creditor’s claim was not filed in a timely fashion. Again, we will take all steps necessary to legally protect your rights in the bankruptcy case.
With many of our clients who file chapter 7 bankruptcy, there are few assets that are nonexempt. In those cases, the trustee may “abandon” the property at the end of the case. This means that the ownership reverts back to you, or whomever it belonged to prior to the bankruptcy filing. If there is non-exempt property that you would like to keep, we can usually come to agreement as to payment terms with the trustee so that you pay the trustee the value of the property. Although the trustee has the right to take possession of all non-exempt property, this doesn’t happen very often in many consumer cases. Because in most cases the value of the property is low, the costs to sell the property would be wipe out any proceeds that could be paid to your creditors.
As you consider your bankruptcy options, it is important to remember that we have represented thousands of individuals just like you. We work on your behalf to ensure your chapter 7 or chapter 13 bankruptcy process is as smooth as possible. Our experience means that we can anticipate the challenges that your case might present and best represent your interests through the bankruptcy process.