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What to Expect When Claiming Bankruptcy

What to Expect When Claiming Bankruptcy

The Process of Declaring Bankruptcy

Once you have decided that claiming bankruptcy is the best option for you, it would be helpful if you were aware of what to expect before your file, during the proceeding, and after your bankruptcy is discharged.

Before You File

All debtors are required to take a credit counseling class, which may be done online or by phone. Your attorney can direct you to the proper, approved course.

A petition needs to be completed that will be filed with the court while claiming bankruptcy. Your attorney or staff will complete the petition for you, but you will have to provide the following information:

  • Paystubs, tax returns for the past 3 years, and W-2 forms. Your attorney will determine if you meet the means test for filing a Chapter 7, if that is your option.
  • Mortgage and auto loan documents, and for any other loans; all credit card statements and collection letters pertaining to your credit cards; and copies of any summons and petitions filed against you or notices of judgment. You should also make a list of your monthly expenses.
  • If you can, get the market value of your automobiles or any other large personal items, although your attorney or staff can obtain that information for you.
  • Copies of your pension, IRA, or other retirement plan, and life insurance policy.

After You File

Once your petition is filed, the automatic stay on all legal proceedings and collection activities goes into effect. A trustee is appointed and you will receive notice to attend a creditor’s meeting, which is scheduled about one month in advance. Your attorney will attend with you. You will meet the trustee who will ask you some basic questions about the accuracy of your petition or the status of some of your property. The meeting only takes a few minutes and your attorney will prepare you for what will be asked.

You will have to take another credit counseling class within 45 days after the creditor’s meeting, which can also be taken online or by phone.


Around three months after the creditor’s meeting and if no objections are filed by any creditors or the trustee to the status of a debt or asset, you will receive a notice of discharge from the bankruptcy court. This means that your unsecured debts, mostly credit cards, have been discharged and you have to obligation to pay them.

At this point, you should begin the process of rehabilitating your credit by making sure you make all loan and other payments on time and by getting a prepaid credit card. Use of this card is reported to the three major credit reporting agencies.

You can also inquire into special programs offered by auto companies to newly discharged debtors. If you filed a Chapter 7, you can apply for an FHA loan two years after receiving your discharge. Consult with your attorney or financial advisor, if you have one, about other steps geared towards restoring your credit.

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