What Happens After You File for Bankruptcy?

Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, attending the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.

What Happens Right After You File Chapter 7 Bankruptcy?

Several important things happen after you file your Chapter 7 bankruptcy paperwork:

• You get immediate protection from creditors and debt collectors. This is thanks to the automatic stay, which prevents creditors from taking collection action against you. This means they can’t call you, sue you, or pursue wage garnishment.

• The court gives you a case number. If any creditors contact you, give them this number and they should stop immediately.

• The bankruptcy court assigns a bankruptcy trustee. The trustee oversees your bankruptcy case, reviews your bankruptcy forms, and conducts the meeting of creditors. 

Your rights and responsibilities during your bankruptcy case are spelled out in federal bankruptcy law, which you may hear called the Bankruptcy Code.

What Happens to Your Credit Score After Filing Bankruptcy?

Chapter 7 and Chapter 13 bankruptcy filings will be recorded on your credit report and usually lower your credit score in the short term. 

The length of time they stay on your report depends on which type of bankruptcy you file. 

• Chapter 7 bankruptcy stays on your credit report for 10 years after the filing date. 

• Chapter 13 bankruptcy stays on your credit report for seven years if you complete the repayment plan or 10 years if you didn’t complete it.

The good news is that you can begin rebuilding your credit as soon as your bankruptcy discharge is entered. Many filers see their credit score improve within the first year after filing.

Many people worry about how bankruptcy will impact their credit scores, but if you’ve already missed a lot of payments, your score has probably already fallen. Making on-time payments is one of the biggest factors in computing your credit score.

After you file your bankruptcy petition, you may be surprised to see how many credit card offers you get! Some will be for secured credit cards, but many will be for traditional unsecured credit cards. Be aware that these will likely have higher interest rates or annual fees.

Part of rebuilding credit after bankruptcy is getting credit and using it wisely. It’s not a bad idea to get a secured or unsecured credit card after bankruptcy. A good repayment history will help your credit score, so make sure you pay the debt off in full every month. Consider using the card only for gas or groceries so that you know you can pay the full bill. 

What Else Do You Have To Do After You File Your Bankruptcy Forms?

Preparing and filing your forms with the bankruptcy court is usually the most time-intensive part of the bankruptcy process. But there are a few more things on the to-do list after that. Let’s take a look.

Pay the Filing Fee or Request a Fee Waiver

Chapter 7 bankruptcy has a $338 filing fee. If you can't afford the fee, you can apply for a fee waiver. If you don’t qualify for a fee waiver, you can apply to pay the filing fee in four installments. The entire fee is due within 120 days after filing. It’s crucial to pay the fee within that time or the court can dismiss your case.

Take the Second Required Bankruptcy Course (Financial Management Course)

You must complete two required courses during the bankruptcy process: a credit counseling course you need to complete before filing bankruptcy and a personal financial management course, which you complete after you file your case. This course is designed to help you take advantage of your fresh start after erasing your debts through bankruptcy.

You have to take the financial management course after your case is filed and within 60 days from the date of your meeting of creditors. After you finish the course, you’ll file a certificate of completion with the court.

Prepare for Your Meeting of Creditors

The 341 meeting of creditors is a required meeting where the bankruptcy trustee verifies certain information about your finances and bankruptcy paperwork. 

The bankruptcy trustee overseeing your case runs the 341 meeting of creditors. They may ask you to provide certain documents, such as copies of pay stubs and tax returns. You must comply with all reasonable requests from the trustee and within the time frame given. Your bankruptcy case will be dismissed if you don't submit the documents requested by the trustee. 

Also, you're required to show a picture ID and evidence of your Social Security number at the meeting of creditors. 

Attend Your Meeting of Creditors

You must attend your meeting of creditors, also known as the 341 meeting. Most filers find the meeting of creditors to be far less scary than it sounds. At this meeting, you'll meet the trustee who will ask you questions about your bankruptcy paperwork. Your creditors are invited to attend, but most of the time they don't. The meeting typically lasts 5–10 minutes. Most 341 meetings are held virtually. Whether your meeting is virtual or in person, a judge will not be present and you won’t be in a courtroom.

After the meeting of creditors, the trustee will file either a Report of No Distribution indicating that no funds are going to be distributed to your creditors or a Notice of Claims Bar Date stating the due date for creditors to file claims to receive funds in your bankruptcy. Other than these filings, ideally you will not hear from the trustee after the meeting of creditors. 

What Happens To Your Car After Filing Chapter 7 Bankruptcy?

If you own your vehicle but are still paying on the loan, you have a few options for dealing with it in a Chapter 7 bankruptcy case. 

One of the forms you will file with the bankruptcy court is called the Statement of Intention. In this form, you tell the court what you plan to do with your car. Here are your options:

Reaffirm the Car Loan

You can reaffirm the debt, keep your vehicle, and continue making payments. This means the debt will not be discharged and you will continue making monthly payments during and after bankruptcy. If you miss future payments, the lender has the right to repossess the vehicle.

If you select this option in your Statement of Intention, your car lender will send you a reaffirmation agreement for you to complete and return. In some bankruptcy cases, the judge will schedule a reaffirmation hearing you’ll need to attend.

Surrender the Vehicle

If you choose to surrender your vehicle, then it will be repossessed and the debt will be discharged in your bankruptcy. Filers with high car payments they can't afford often choose to surrender their car to get out of the debt. 

The automatic stay stops creditors from repossessing a vehicle right after a bankruptcy case is filed. However, the stay expires 45 days after the meeting of creditors if the filer doesn't enter a reaffirmation agreement or redeem the property. Creditors can then repossess the vehicle without first filing a motion for relief from the automatic stay. 

Redeem the Vehicle

To redeem a vehicle in bankruptcy means to pay the lender the value of the car. To complete a redemption you will have to determine the vehicle's value and be able to pay that full amount upfront. If your vehicle is worth significantly less than the amount you owe, consider redemption by getting a private loan from a family member or friend.

This option requires that you file a Motion to Redeem with the bankruptcy court. The redemption must be approved by the bankruptcy judge. You may have to negotiate the value of the vehicle with the original lender. You can do this either before or after you file the motion. The judge can decide the value of the vehicle if you and your lender can't agree on it. 

If you file Chapter 13 bankruptcy, your car loan (and other secured debt like a mortgage) will be treated differently. Filers are able to keep their vehicle and continue making payments through their Chapter 13 bankruptcy payment plan. If they don't want to keep the vehicle, Chapter 13 filers also have the option to surrender the vehicle. 

What Happens to Your Student Loans After Filing Bankruptcy?

Some federal student loans can be discharged through Chapter 7 bankruptcy. However, student loans are treated differently than other kinds of unsecured debt like credit card debt, medical bills, or personal loans. You’ll need to file additional paperwork to prove that you meet the undue hardship criteria to have your loans erased. This paperwork and process is referred to as an adversary proceeding. If you qualify to use Upsolve’s free filing tool and you’re eligible for a student loan discharge, we can help you through the process.

To learn more about this process, read this article: Yes, You Can File Bankruptcy on Student Loans. Here’s How.

What Happens To Your Personal Property After Your File Bankruptcy?

The vast majority of people who file Chapter 7 bankruptcy get to keep all of their property. Chapter 7 is sometimes called liquidation bankruptcy, which makes some people worry they’ll lose everything they own. But people rarely lose anything thanks to bankruptcy exemptions. To learn more about how exemptions work, read What Are Bankruptcy Exemptions?

If you have any non-exempt property (property that’s not covered by an exemption), you might still qualify to file for Chapter 7, but your case may be more complicated. In this case, it could be a good idea to get a free consultation with a bankruptcy lawyer to make sure you can protect what you own.

What Happens if You Need To Make Changes To Your Bankruptcy Forms After You File Your Case?

When you sign your bankruptcy forms, you're declaring that the information in your bankruptcy forms is true and correct to the best of your knowledge. If you accidentally leave something out or make a mistake, you'll need to make changes to your forms. 

You do this by filing an amendment with the court. You might need to file an amendment because you forgot to list an asset or a creditor, you need to add information that was originally missed, you change your mind about signing a reaffirmation agreement, or the trustee requests that forms be amended. 

How Do You Deal With Lenders and Debt Collectors After You File Your Chapter 7 Case?

The good news is that you shouldn’t have to worry about debt collectors after you file!

Remember that the automatic stay stops creditors and collection agencies from being able to contact you or to try to collect from you after you file for Chapter 7 or Chapter 13 bankruptcy. Even collection phone calls must stop immediately. This is one of the biggest advantages of filing bankruptcy versus other forms of debt relief like debt settlement, debt consolidation, or a debt management plan.

Also, remember that after you file bankruptcy your creditors will close your credit card accounts. Even credit cards with a zero balance when you file will most likely be closed by the creditor. 

Dischargeable unsecured debts, like credit card debt and medical debt, are generally automatically discharged in a successful bankruptcy, giving you a clean slate. However, if a creditor objects to discharge, you’ll have to respond to their objection and tell the court why you believe the debt should be discharged. 

Keep in mind that not all debts can be erased through bankruptcy. You still need to pay back any non-dischargeable debts, such as recent tax debts, back child support, and alimony.

Need Help Filing Your Bankruptcy Case?

Upsolve is a nonprofit with a free app that can prepare you to file Chapter 7 bankruptcy. You can take our two-minute screener to see if you qualify. If you don’t qualify to use our free tool or you simply want to talk to an expert, you can schedule a free consultation with a bankruptcy attorney.