This question, “what happens when you file bankruptcy?” is a common one for individuals troubled with debt, and the lack of a formalized answer can sometimes cause anxiety and inaction. Not acting on debt is among one of the worst things that you could do, and so we’ll explain exactly what happens when you file bankruptcy in the two most common types: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
There is a lot of information to collect and organize in order to properly file for bankruptcy and an experienced Dayton bankruptcy attorney will be able to help guide you with the steps leading up to filing for a chapter 7 or chapter 13 bankruptcy. Once you have filed, here are the first three things that happen when you file bankruptcy.
- Automatic Stay
When you file for bankruptcy, there is a temporary moratorium imposed on all debt collecting activity, foreclosures, and legal proceedings regarding your debt. This can give you the necessary time to regroup and examine your finances. The automatic stay can also halt automobile repressions and utility services being cut off in certain situations.
- Bankruptcy Trustee Assigned
The court where you filed bankruptcy will assign a bankruptcy trustee. This is an individual that will handle all the facets your bankruptcy case including ensuring your paperwork is in order and taking over and liquidating nonexempt property in your bankruptcy case. All proceeds will go towards paying back your creditors.
- 341 Meeting of Creditors
You’ll be instructed by the court on when to attend the meeting of creditors where you’ll answer questions about your finances under oath. These meetings are not as tense as most would expect and are usually painless assuming you are straightforward and honest about your bankruptcy.
Under bankruptcy law, only after the meeting of creditors is your eligibility to file Chapter 7 approved. While Chapter 7 bankruptcy is harder to be confirmed than it was prior to 2015, you may still have the ability to file for Chapter 13 bankruptcy and structure a repayment plan to last for the next 3-5 years if your Chapter 7 is denied. The federal bankruptcy courts highly recommend you obtain the services of an attorney in order to get through not only these three steps but also for assistance in organizing and filling out the paperwork, as well as, helping see your bankruptcy to its finality.