Next Steps After Filing for Bankruptcy
Although you may come to the decision that bankruptcy is the best option for resolving your financial issues, you may have questions about what happens once you file a petition for it.
What Happens When a Bankruptcy Petition Is Filed?
After you file your bankruptcy petition with the bankruptcy court, the court will assign a trustee to your case. The trustee is responsible for managing your bankruptcy estate, which means collecting and accounting for your assets and using your assets and income to pay your creditors.
Soon after the filing of your petition, you will be required to attend a meeting with the bankruptcy trustee in your case along with all of your creditors who choose to attend the meeting. Although this meeting is not held in court, you will still be put under oath. The trustee will ask you questions to verify the information provided in your bankruptcy petition and determine whether you qualify for the type of bankruptcy you are seeking, whether any of your debts are dischargeable, and whether you have assets that can be used to satisfy your debts. Any creditors who attend this meeting can also ask you questions about your financial situation; in particular, creditors may be interested in whether you accrued debts without the intention to repay them.
You may choose to sign a reaffirmation agreement, which means that you intend to fully repay certain secured debts and thus the secured creditor will not need to repossess the asset and liquidate it to satisfy your debt. You should only sign a reaffirmation agreement if you have the financial ability to repay that secured debt.
What Happens in Bankruptcy Court?
If your bankruptcy is not contested by the trustee or any creditors, you may not even need to step foot inside a courtroom. Instead, you and your attorneys will negotiate a resolution to your bankruptcy proceeding with the trustee and your creditors.
If creditors challenge your bankruptcy plan, you will need to appear before a bankruptcy judge for a confirmation hearing. You may need to appear multiple times until a plan is finally confirmed by the bankruptcy court. You may also need to appear in court if you need to modify a plan that has already been confirmed by the bankruptcy court.
What Happens Following the Bankruptcy Discharge?
If you file for Chapter 7 bankruptcy, your case is over once you receive a discharge from the bankruptcy court. If you had assets that could be liquidated to pay creditors, you may have to continue to work with the trustee to liquidate those assets and pay creditors whose debts could not be discharged. The court also retains the power to revoke a discharge for up to one year if the court discovers that you committed fraud or concealed assets.
If you file for Chapter 13 bankruptcy, your case will be closed after you make your final payments to the trustee, the trustee makes the final disbursements to your creditors, and you receive a discharge from the bankruptcy court.
Obtaining Credit or Loans Following Bankruptcy
It can be difficult to secure credit or loans for several years following bankruptcy. Bankruptcy is seen as a serious black mark on a person’s credit report, although the effect of bankruptcy can lessen over time provided you demonstrate financial responsibility following your bankruptcy.
Fortunately, there are creditors whose business focuses on providing credit or loans to persons emerging from bankruptcy and helping them to rebuild their credit. It can be possible to obtain a FHA mortgage to purchase a home in as little as two years following bankruptcy. In any event, the interest rates you will be charged for credit or loans will be much higher following a bankruptcy.
Contact a Clifton Bankruptcy Attorney for a Consultation in New Jersey Today
If you are struggling with debt, you may need a fresh start financially. An experienced bankruptcy and debt relief attorney can help you explore your options and determine the best course of action for you, your family, and/or your business. The experienced New Jersey bankruptcy lawyers at The Law Office of Silverman & Roedel, LLC understand the nuances of New Jersey and federal bankruptcy laws, so we can help you protect your interests. Call us anytime at (973) 772-6411 or fill out the online contact form to schedule a confidential consultation. We have an office conveniently located at 1187 Main Ave., Suite 2C, Clifton, NJ 07011.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.