What Happens After Filing Bankruptcy?
Much of the action in a bankruptcy case actually happens after the filing, when you've submitted your bankruptcy petition. The first and perhaps most important event is the automatic stay, a protection issued by the court that prevents creditors from carrying out any form of solicitation, such as repossessing your home. The stay becomes effective immediately after filing bankruptcy, and remains in effect throughout the filing unless a creditor files a move to lift it.
Creditors' Meeting
Next, a meeting between you, your creditors, and a trustee is scheduled, typically four to six weeks after filing bankruptcy. This is also called the "341 meeting," as it is described and required in Section 341 of the Bankruptcy Code. During the meeting, the trustee goes over your petition, check for discrepancies, and question some of your claims if needed.
Creditors aren't required to attend the meeting (and usually don't), but they can contest the terms even after filing bankruptcy. However, your presence is mandatory, and failure to attend can cause your bankruptcy case to be dismissed.
Liquidation or Repayment Plan
In a Chapter 7 bankruptcy, the trustee takes over the process of liquidating non-exempt assets. This means they can sell off some of your properties in order to pay your creditors. Afterwards, a 60-day wait is imposed during which creditors can file any complaints. If no one comes forward, you will be eligible for discharge.
In Chapter 13, the trustee go over your proposed repayment plan with your creditors. If no creditors contest the terms and the plan is approved, the plan goes into effect. The first payment is usually due about thirty days after filing bankruptcy.
Exiting Bankruptcy
Chapter 7 bankruptcy usually takes three to five months from filing to discharge, provided no creditors come up and oppose it. With a Chapter 13 bankruptcy, you are only eligible for discharge once you've completed the repayment plan, which lasts three to five years.
In both cases, before getting your official discharge, you have to complete a debtor education course with a court-approved agency. The course helps you understand what happens after filing bankruptcy and gives you tips on better managing your debt. It costs about $50 and lasts about two hours, and can usually be taken in person, over the phone, or online.