For cases filed after October 17, 2005, you must obtain a certificate from an approved credit counseling agency before you can file your case. This costs approximately $50 and can usually be done quickly online. Your attorney will provide you with information on how to obtain this counseling. A copy of any payment plan devised by the counseling service must also be filed with the court.
When these documents, which you have signed under penalty of perjury, are filed with the Court, you will be assigned a case number and this commences your case. In most cases, immediately upon filing your case, an injunction goes into effect stopping your creditors from taking any further action to collect or recover on any debt you owe without first getting permission from the bankruptcy court (which is only granted for specific purposes). This injunction is called the "automatic stay". For cases filed after October 17, 2005, the automatic stay is really "semi-automatic" because if you have a prior dismissed bankruptcy case in the past 12 months, or if certain other conditions are met, you may need to file a motion to get the court to impose the Stay.
Your creditors have until 60 days after the date first set for your
meeting with the Trustee to file a complaint objecting to the discharge
of their debt, or to your entire discharge (see above). Grounds for
doing this include fraud (such as incurring charges on a credit card
that you did not intend or have the reasonable ability to repay at the
time they were made), false statements on a credit application, fraud
while acting in a fiduciary capacity, willful or malicious injury to a
person or property of a person, and certain others. Creditors can seek
an extension of time to file their complaint, but as long as they
received notice of your bankruptcy case, they must either file their
complaint, or a motion requesting an extension prior to the expiration
of the 60-day period.
In most cases no objections are filed.
However, if a creditor does file a complaint, there will be a trial.
You will need to consult with an attorney at that point to decide
whether you wish to defend the action, settle it, or just let it go to
default judgment. Usually, the matter can be settled or even pre-empted.
The
Trustee has until 30 days after the date first set for your meeting
with him/her to file an objection to any exemptions you have claimed.
Again, this is rare, but it can happen depending on the specific
exemptions you need to use in your case. You should consult with your
attorney about the likelihood of this happening in your case.
When these documents, which you have signed under penalty of perjury, are filed with the Court, you will be assigned a case number and this commences your case. You must file all tax returns that were required to be filed for the 4 years prior to filing your case.
In most cases, immediately upon filing your case, an injunction goes into effect stopping your creditors from taking any further action to collect or recover on any debt you owe without first getting permission from the bankruptcy court (which is only granted for specific purposes). This injunction is called the "automatic stay". For cases filed after October 17, 2005, the automatic stay is really "semi-automatic" because if you have a prior dismissed bankruptcy case in the past 12 months, or if certain other conditions are met, you may need to file a motion to get the court to impose the Stay.
In Chapter 13, along with all your other papers, you file a "Plan"
of repayment with your creditors. This plan contains several required
provisions, but the main ones are as follows:
A. You are paying
ALL of your projected disposable income into the plan for a minimum of
36 months, and a maximum of 60 months. The length of the term
depends on numerous factors. Disposable income is defined as your
"current monthly income" (which is an average of all income received in
the 6 months prior to filing your case, excluding social security
income and child support payments reasonably necessary for the support
of the child) minus your reasonable and necessary living expenses
based on standards set forth by the Internal Revenue Service for your
district. For cases filed after October 17, 2005, it is not yet clear exactly how your monthly payment will be calculated. In part, it depends on whether or not your gross income for the 6 months prior to filing your case leaves you above or below the "median income" level in your district. It seems that if you are above the median income, (depending on how much above you are) your disposable income will be determined by using only IRS allowed expenses (and not your ACTUAL monthly expenses). Obviously, this can lead to a monthly required payment that you could have difficulty making. To see who to thank for this, click here to see your Congresspersons who voted for it.
B. Your creditors will receive no less than they would receive
if you did a Chapter 7 liquidation. In other words, if you have assets
which are not fully exempt, then you need to pay out at least that
amount over the term of your Plan.
C. Certain creditors must be
paid 100% through your Plan, so you must have sufficient disposable
income to be able to do this in the required time frame. Examples of
creditors needing to be paid 100% are: Mortgage arrearages, taxes less
than 3 years old, past due child support or alimony and others.
Assuming
you meet the above (and certain other) requirements, your Plan can
theoretically pay anywhere from zero to one-hundred percent to your
general unsecured creditors.
Your monthly proposed plan payments are first due 30 days after your case is filed and then continue for the duration of your plan. Your attorney will explain to you when, where and how to make these payments. If you miss any payments required prior to your Plan being confirmed by the court, your case will be dismissed and you will lose the protection of the bankruptcy Stay. Additionally, you must maintain all normal monthly payments to any secured creditors you have (such as mortgages, car payments, etc.) if you intend to retain the collateral on which those debts are secured, and on taxes or other debts which come due after filing. A failure to maintain or stay current on such payments during the pendency of your Chapter 13 case can result in the loss of the asset and dismissal of your case.
Once your plan is confirmed by the court, you simply need to make
the required payments for the duration of your plan. However, you
must provide the Trustee in your case a copy of your subsequent
tax returns that come due and are filed during your plan term
Once you have completed all the required payments due under your plan, the Trustee will start to process your discharge. This usually takes several months to complete after receipt of your final payment. YOU ARE NOT DISCHARGED FROM ANY DEBTS UNTIL YOU RECEIVE THE DISCHARGE ORDER FROM THE COURT. If you are curing a mortgage default, your loan is not reinstated until all payments have been received as required under the plan by that creditor.
For cases filed after 10/17/05, you are required to complete a financial management course before receiving your discharge. In Chapter 7 cases, you must have completed this course (usually about 2 hours) and submitted the certificate of completion to the court no later than 45 days after the date first set for your meeting with the Trustee. If you fail to do this, you will NOT get a discharge. This course can also be done over the internet or by phone, and costs between $19 and $50.
Frequently asked questions about what happens after you file your bankruptcy case.