filing chapter 7 bankruptcy

5 Things That Happen After Filing Chapter 7 Bankruptcy

filing chapter 7 bankruptcyFAQs - What Happens After Filing Chapter 7 Bankruptcy?

After you have completed the pre-filing credit counseling course and have assembled all of your documents and schedules, it will be time to file your Chapter 7 bankruptcy petition. Preparing your bankruptcy forms and debt and asset schedules is normally the most time-intensive process involved in a Chapter 7 bankruptcy. However, getting the documents completed and filed does not mean that you are finished. It is common for people to feel apprehensive about what might happen after filing Chapter 7 bankruptcy cases. To help you understand the process and what you might expect, here are five things that happen after people file for Chapter 7 bankruptcy San Jose from the Shulman Law Office.

1. Initial matters- Assignment of the bankruptcy trustee

When your Chapter 7 bankruptcy petition is filed and you pay your filing fee, the court will assign your case a case number and a trustee to oversee your case. The bankruptcy trustee will be tasked with reviewing your bankruptcy forms and identifying any non-exempt assets that he or she can seize to satisfy a portion of your unsecured debts. You might be asked to provide additional documentation about your assets by the trustee.

You are legally obligated to cooperate with the trustee assigned to your bankruptcy case while it is pending and until the court issues a discharge. In addition to other documents, you will need to provide the trustee with a copy of your income tax returns.

The trustee will also schedule the meeting of creditors.

Later on in your case, once the meeting of creditors has been held, the trustee will either file a report of no distribution if the creditors will not receive anything or a notice of the bar date for claims providing a due date for creditors to file claims for funds. Beyond these filings, you will likely not hear from the trustee after your meeting of creditors has been held.

Many people who file for protection under Chapter 7 have all of their assets protected by bankruptcy exemptions. Exempt property includes assets that cannot be taken by the trustee and sold to satisfy your unsecured debts. If you have any non-exempt assets, the trustee can seize and sell them to repay a portion of your unsecured debts. If you want to keep non-exempt property, you can negotiate with the trustee to pay the trustee the value of the non-exempt asset.

2. Automatic stay is issued

One of the most immediate benefits of filing Chapter 7 bankruptcy is the automatic stay. This is an injunction that will be issued by the bankruptcy court directing your creditors to immediately stop all further collection activities against you while your case is pending. The automatic stay will be sent to each creditor you have listed in your bankruptcy petition, so it is important that you list all of them. Once the automatic stay is issued, your creditors will have to stop all of the following things:

  • Initiating or continuing with a creditor lawsuit against you
  • Continuing to garnish your wages
  • Enforcing, perfecting, or creating a lien against your property
  • Calling you to collect debts
  • Sending you debt collection letters
  • Levying your bank accounts
  • Foreclosing on your home
  • Repossessing property

While the automatic stay will temporarily halt foreclosure proceedings or repossessions of your vehicles, the relief will be temporary. Since mortgages are secured against homes, and auto loans are secured against cars, these creditors can resume foreclosure or repossession proceedings after your bankruptcy is over. If you are in danger of losing your home in foreclosure, you might want to talk to your bankruptcy lawyer about whether Chapter 13 might be an option for you instead of Chapter 7.

If one of your creditors violates the automatic stay and continues trying to collect on a debt, your attorney can help you notify the court. If the court finds that the debt collector's actions were willful, the collector can face sanctions. Debt collectors who violate the automatic stay after knowing the bankruptcy case existed can be fined, ordered to pay attorney's fees, and ordered to pay damages to the debtors.

3. Scheduling of the meeting of creditors

Your bankruptcy trustee will schedule a meeting of creditors after you have submitted all of your required documents. The trustee might send a letter to you asking for any additional documents to provide. Make sure to comply with any requests from the trustee, and do so before the listed deadline. If you fail to submit documents the trustee has requested, the bankruptcy court could dismiss your case.

The meeting of creditors will likely be scheduled a month or two after you file your Chapter 7 bankruptcy petition. You will need to show a picture ID and your Social Security number when you attend the meeting of creditors. The meeting of creditors is held outside of the court and will generally be in the area where you live. At this meeting, your creditors can attend and ask questions of you. However, in many Chapter 7 cases, only the debtors, their attorneys, and the trustees will be present.

The meeting of creditors is required. While it might sound intimidating, many people who file for bankruptcy find that it is not as scary as it might sound. You will attend with your lawyer. You will meet with the trustee, and he or she will ask you questions about your bankruptcy documents. In most cases, the creditors do not attend. Typically, a meeting of creditors will only last around 10 minutes. If you do not have any non-exempt assets, the trustee will issue a notice of no distribution to your creditors. If you do have non-exempt assets, the trustee will issue a notice to your creditors of the date by which they must file claims to recover money.

If you have a vehicle on which you are still making payments, you will have a couple of options about how to deal with it. The automatic stay will expire 45 days after the meeting of creditors. If you have not reaffirmed your car loan debt, the company can repossess it. You will need to file a statement of intention with the bankruptcy court in which you explain what you plan to do with your secured debts.

You will have the choice of reaffirming your car loan so that you can keep your car and continue making payments. If you reaffirm your car loan, it will not be discharged. You will need to continue making your monthly payments, and if you miss payments in the future, your lender can repossess your car. If you choose this option on the statement of intention, your lender will send a reaffirmation agreement to you to fill out and return.

You can also choose to surrender your car. If you choose this option, your vehicle will be repossessed. Any remaining debt will be discharged in your bankruptcy case.

Finally, you can choose to redeem your vehicle. To do this, you will have to pay your lender the value of your vehicle. You will need to figure out how much your vehicle is worth and pay that amount in full. If your vehicle is worth a lot less than how much you owe, a redemption can make sense. To redeem a vehicle, you will need to file a motion to redeem with the bankruptcy court, and the judge will have to approve it. If you and your lender cannot agree to the value of your vehicle, the judge can determine it for you.

If you have a vehicle lease, you can also choose how to handle it in your statement of intention. You can assume the lease and continue to make your payments or reject the lease and return the car.

4. Second credit counseling course

Before you file a petition for bankruptcy, you are required to complete a credit counseling course and file a certificate of completion with the court at the time you file your petition. You will also be required to complete a second credit counseling course before the court will issue a discharge. The second course must be taken from an approved provider and will cover topics of personal financial management so that you can take advantage of the fresh financial start you will receive from discharging your debts in bankruptcy.

This course must be taken after your bankruptcy case is filed. You need to make sure that you complete it within 60 days of when the meeting of creditors is held. Once you complete it, you will receive a certificate of completion. Give this certificate to your attorney to file with the court.

5. Discharge of your debts

The final step of your Chapter 7 bankruptcy case occurs when your debts are discharged. However, not all of your debts will be dischargeable in bankruptcy. If you want to keep the property secured by a loan such as your vehicle or home, you will need to continue making your payments during and after your bankruptcy case. Your lenders will not be able to try to collect from you, so you won't receive statements. If you want to keep your vehicle, you will likely need to mail in checks during your bankruptcy.

Some debts cannot be discharged in bankruptcy and will continue after you receive your discharge. Some of these types of non-dischargeable debts include the following:

  • Child support arrearages
  • Alimony arrearages
  • Most student loan debt
  • Most tax debt
  • Criminal restitution

However, your dischargeable unsecured debts can be discharged in bankruptcy, including personal loans, medical debt, and credit card debt. If your bankruptcy case is successful, you will no longer be responsible for repaying these types of debts after a bankruptcy discharge. The creditors also will no longer be able to collect on discharged debts, allowing you to enjoy a fresh financial start.
How do you find the best bankruptcy lawyer?

When you are considering whether to file for Chapter 7 bankruptcy, it is a good idea to get help from an experienced bankruptcy lawyer who is knowledgeable about bankruptcy laws. Your attorney should be able to communicate legal topics with you in a way that you can understand and be compassionate about the situation you are facing. To learn more about what to expect when filing for Chapter 7 bankruptcy in San Jose, call the Shulman Law Office at 408-297-3333.

 


What are the Upsides and Downsides of Filing for Bankruptcy?

What are the Upsides and Downsides of Filing for Bankruptcy?

Many Californians are struggling with unaffordable levels of debt. While many people qualify to file for bankruptcy, some never do. For some people, filing for bankruptcy is the best solution to managing their debts. Deciding if you should file for bankruptcy will depend on your financial circumstances and the potential ramifications. An experienced bankruptcy attorney at The Shulman Law Office can help you to determine whether bankruptcy is the right choice for your situation. Knowing the upsides and downsides of filing for bankruptcy can help you to decide if and when you should file a bankruptcy petition.

What are the upsides to filing for bankruptcy?

Filing for bankruptcy offers multiple benefits for people who are unable to afford their payments. Some of these advantages provide good reasons for people to consider filing for bankruptcy.

Issuance of an automatic stay

When you file a bankruptcy petition, the bankruptcy court will issue an automatic stay. This is an injunction that prohibits your creditors from engaging in any further collection activities. The stay does not eliminate your debt, but any debt collection activities will be suspended until the stay is lifted or your bankruptcy case is over. The automatic stay will end letters and calls from debt collectors, wage garnishments, foreclosure proceedings, creditor lawsuits, and repossessions.

If one of your creditors continues to engage in debt collection activities after the automatic stay has been issued, your bankruptcy attorney can file a motion with the bankruptcy court to hold the creditor in contempt of court. The court can then force them to stop trying to collect on the debt and order them to pay a fine and possibly pay damages to you.

An automatic stay in a bankruptcy case will not stop tax audits, criminal proceedings, child support, alimony, or efforts to collect the debt from cosigners. If you previously filed for bankruptcy during the last year, you can ask the court to extend the initial automatic stay. However, if you have filed for bankruptcy several times during the past year, the automatic stay will have to be ordered by the court.

Ability to discharge debts

While some types of debts are non-dischargeable in bankruptcy, others can be discharged. When a debt is discharged, it ends your obligation to repay it. When your bankruptcy case is over, the creditor for a discharged debt may not resume collection activities. Dischargeable debts include many types of unsecured debts, including medical bills, credit card debt, and personal loans. Secured debts will not be discharged, however. There are also certain types of debts that cannot be discharged in bankruptcy, including back child support and alimony, student loans, certain types of taxes, criminal restitution, and others.

Bankruptcy exemptions

California has two bankruptcy exemption systems that you can choose from. Exempt property is not included in your bankruptcy estate and cannot be sold by the trustee to repay your creditors. The exemptions let you keep the exempted property after you file for bankruptcy. Some exemptions apply to specific types of assets while others apply to property worth up to a specific dollar amount. Other exemptions can be applied to anything that you own. Bankruptcy exemptions help you to save some of your property during and after your bankruptcy case.

Surprising improvements of credit scores

When you file for bankruptcy, it will make your credit score fall and will remain on your credit history for seven to 10 years. However, many people who file for bankruptcy see score improvements once their debts are discharged. They can then begin to rebuild their credit and enjoy a fresh start. However, even if bankruptcy is the right option for you, understanding the consequences is also important before you file.

What are the downsides of filing for bankruptcy?

While filing for bankruptcy offers some benefits, there are also some disadvantages that you should consider. Knowing the downsides of filing for bankruptcy can help you to know what to expect.

Immediate drop of your credit score

When you file for bankruptcy, your credit will be immediately impacted. The bankruptcy will stay on your credit record for seven years if you file for Chapter 13 bankruptcy or 10 years if you file for Chapter 7 bankruptcy. Having a bankruptcy on your credit record can make it more difficult to get a mortgage or other loan for several years.

Losing your credit cards

When you file for bankruptcy, your credit card companies will likely cancel your cards. After your debts are discharged, you may receive credit card offers. While these can help you to rebuild your credit after bankruptcy, they will likely carry high rates of interest and annual fees.

Losing some types of property

While California has exemptions available for some types of property, not all property can be exempted. If you have high-value property or non-exempt assets, the bankruptcy trustee might seize them to sell and repay your creditors.

Some debts can't be discharged

Some types of debts cannot be discharged in bankruptcy. These include most student loans, certain tax debts, alimony, child support, and criminal restitution. Your obligation to repay these debts will continue after you receive a discharge of your dischargeable debts.

Cosigner liability

If you had a cosigner for a personal loan and file for bankruptcy, the creditor can still pursue your cosigner for payment. His or her liability to repay the debt will not be erased because of your bankruptcy. You should tell a cosigner that you intend to file for bankruptcy before you do. He or she will also be notified by the bankruptcy court after you file.

Stigma

Some landlords and prospective employers ask about bankruptcy cases. If you apply for a job or an apartment after you file for bankruptcy, it can hurt your chances.

Talk to an experienced bankruptcy lawyer today

The decision to file for bankruptcy is complex. Understanding the upsides and downsides of bankruptcy is important so that you can make a more informed choice. If and when you should file for bankruptcy will depend on your financial circumstances. To learn more about whether it is the right decision for you, contact the Shulman Law Office in San Jose today by calling us at 408-297-3333.

 


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