What Happens After Filing Bankruptcy
After one files bankruptcy, an automatic stay (see below) is issued that prevents those to whom the debt is owed from further collection activities.
About a month after you file bankruptcy, a meeting with all of your creditors will take place to discuss your bankruptcy. This doesn't mean that all of your creditors will attend. Perhaps none of them will attend; however, the bankruptcy trustee will definitely attend. If a creditor does attend, it is likely for the purpose of contesting your exemptions. The meeting generally lasts for an hour or less. At this meeting, the bankruptcy trustee will go over your bankruptcy papers with you. The trustee might question certain items you've listed. In any event, he or she will look for discrepancies and inaccuracies in the amounts you've put down on your bankruptcy papers.
What an Automatic Stay Does Not Affect
Criminal proceedings can proceed against you regardless of whether you filed bankruptcy. Also, note that the creditor can go after anyone who co-signed debt for you or a co-debtor, such as a spouse who did not file bankruptcy with you. A creditor can also ask that they stay be lifted in certain situations, particularly if the debt is collateralized.
The above information explains why bankruptcy is often used as a tool to fight back against threats of foreclosure, repossession or litigation.
Next topic: Federal Bankruptcy Exemptions
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All of the property that you have not claimed to be exempt is given to the bankruptcy trustee at this meeting for liquidation. The bankruptcy trustee will then begin the process of selling off your assets to pay your creditors. You will likely be informed at this meeting that you are prohibited from selling, giving away or throwing away any of your property without the permission of the bankruptcy court.
The time between filing for bankruptcy and obtaining a discharge usually lasts anywhere from four to six months. Until you obtain a discharge, you have the right to back out of the bankruptcy, meaning you can request that the bankruptcy be dismissed.
Automatic Stays
An automatic stay is a court order that goes in to effect after you file bankruptcy. This court order prevents your creditors from trying to collect any debt from you from the moment they receive notice. This means that they cannot phone or write you, harass or threaten you, and above all, they cannot sue you.
An automatic stay also has the following effects:
Repossessions -- None of your property can be repossessed;
Taxes -- The IRS is barred from any collection activities;
Landlords -- You cannot be evicted, even if you are behind in your rent;
Mortgages -- Your mortgage company cannot begin or continue with foreclosure proceedings;
Litigation -- Lawsuits and wage garnishments are barred or suspended (paternity suits and child support-related litigation are not barred or affected).
