Are you always in a situation where you run out of money? Or you’re constantly left with the hard decision of choosing to either pay your creditors or decide which debt to pay. Anytime you file for a bankruptcy discharge, you’re actually asking the bankruptcy court to cancel out most of your unsecured debt (although it may not help if you have experienced a student loan hardship).
Depending on what you owe, and the bankruptcy chapter that you filed for, you may encounter some un-secured debt that is un-dischargeable by the bankruptcy court. However, you are guaranteed of getting a discharge on a substantial amount of debt.
Things That Occur After You Declare Bankruptcy
Anytime you file for bankruptcy, a lot of things happen. Some of the things that happen when you file for bankruptcy are:
1. Bankruptcy Automatic Stay
The very moment you file for a bankruptcy petition at the bankruptcy court, you will immediately get a bankruptcy stay as provided by the Bankruptcy code—this stay will remain till you get a discharge or the bankruptcy case closes. Does bankruptcy clear judgments? That is important that you should find more details about the article attached.
There are some reasons why the bankruptcy stay won’t automatically go into effect, one of those reasons is a situation where the individual filed for multiple bankruptcy cases, or the individual has suffered a prior dismissal on a previous case.
The bankruptcy will prevent creditors from further collecting the debts owed by the person who filed the case. It allows the debtor to have enough time to reorganize their debt if they file for a Chapter 13 bankruptcy discharge, or seek a relief when they file for a Chapter 7 discharge. A bankruptcy petition prevents creditors from taking any action to collect their debt, except they first seek the approval of the bankruptcy judge.
It’s important to keep in mind that bankruptcies can change from state to state. For instance, if you file for Chapter 7 bankruptcy in Florida, it may look slightly different from a Chapter 7 bankruptcy in Illinois or a Chapter 7 bankruptcy in Indiana. Be aware of these potential differences before filing for bankruptcy.
2. You Must Complete Your Debtor Education Course
A debtor must first complete two different bankruptcy courses before the bankruptcy court issues a bankruptcy discharge. Before filing for a bankruptcy discharge, you have to first complete a credit counseling course. Then, after declaring bankruptcy, you’ll then complete a debtor education course.
It is compulsory to take the second bankruptcy course after you filed your bankruptcy petition and before you get a bankruptcy discharge. In fact, you can’t get a bankruptcy discharge without submitting your certificate of completion for both credit counseling courses. Generally, the deadline for submitting the certificate depends on the bankruptcy Chapter you’re filing under. But it’s best to file your certificate of debtor education course before the First Meeting of Creditors so that you don’t leave out this requirement as it can result in a case dismissal. When filing bankruptcy it is also important to understand bankruptcy homestead exemption. There is a lot to learn and know before diving in.
3. Attend the First Meeting of Creditors
It is important that all debtors who are filing for bankruptcy discharge attend the 341 Meeting or First Meeting of Creditors. The bankruptcy court will schedule the 341 Meeting to a time after you’ve filed for a bankruptcy discharge.
The First Meeting of Creditors will be arranged by the bankruptcy trustee assigned to be in charge of the case—the bankruptcy judge won’t attend this meeting. You will be asked to answer some question about your finances under oath. Although creditors hardly show for this case, if they do, they’re permitted to ask questions.
4. Propose a Chapter 13 Repayment Plan
If you file for Chapter 13 bankruptcy, then you’ll be asked to file proposal of your preferred Chapter 13 repayment plan after filing for bankruptcy. The plan should adequately explain how you plan to reorganize your debts, including college debt. Every creditor and party to the case will get a copy of the Chapter 13 plan.
The judge still has the power to deny or ratify the case—and he/she does this during a confirmation hearing on the proposed plan. If the court, creditor or trustee should object to the proposal, then your attorney can submit an amended proposal.
5. Receive Your Bankruptcy Discharge
The Bankruptcy court will give you a bankruptcy discharge when they notice that you’ve met the requirement as stated by the bankruptcy code. The discharge will take off your liability to repay your debts.
You will get a discharge on the majority of your unsecured debt—this holds for both Chapter 7 and Chapter 13 bankruptcy. Some examples of debts you can get rid of via a bankruptcy discharge are
- Medical debts
- Majority of old income tax debt
- Old utility payments
- Most judgments and personal loans
- Credit card bills
- Old lease payments
- Some student loan debts
To know if the bankruptcy court can discharge your bankruptcy debt, you should speak with you, bankruptcy lawyer.
Before filing for bankruptcy, you should first compare your option, and know what the process will cost you. One of the best ways to get out of debt is to file for bankruptcy, but before filing for one, it’s best to first speak with an experienced lawyer. In addition, it is important to understand that rulings for bankruptcy are somewhat based on the state you live in. For instance, if you are filing bankruptcy in Maryland, or filing bankruptcy in Tennessee you may have some different rules.