What happens after I file bankruptcy?
When a debtor files a bankruptcy petition, the following things occur:
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The moment you file your bankruptcy petition
at the Clerk's Office, the law imposes an automatic stay that takes effect
immediately. The automatic stay prohibits all creditors from taking any collection action
against you (the debtor) or your property. Creditors must be advised that the automatic stay is in
effect. |
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Using the addresses that the debtor supplies in the
matrix, the Bankruptcy Court issues a notice to all creditors advising them of the filing of
the bankruptcy, the case number, the existence of the automatic stay, the name of the
trustee assigned to the case (if filed under chapter 7, 12, or 13), the date set for the
meeting of creditors (called the "341 meeting"), the deadline (if any) for filing
objections to the discharge of the debtor and/or the dischargeability of specific debts, and
whether and where to file claims. The exact information in the notice varies, depending on
the chapter under which the case is filed. In a chapter 7 case involving an individual
debtor, creditors generally have sixty (60) days from the first date set for the meeting of
creditors to object to the discharge of the debtor and/or the dischargeability of a specific
debt. |
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The first meeting of creditors is held. (This meeting is discussed
below.) |
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If the deadline for objecting to discharge
passes without any objections to the debtor's discharge being filed and the debtor is an
individual (as opposed to a corporation, partnership, or business trust), the court will issue the
discharge order. (A chapter 7 debtor that is a corporation, partnership, or business trust is not
eligible to receive a discharge.) |
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In a chapter 7 case in which the debtor's
bankruptcy estate has no assets from which creditors can be paid, the trustee will prepare a
report of no distribution and (assuming the debtor has already been granted or denied a discharge)
the Clerk's Office will close the case. |
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In a chapter 7 case in which the debtor's
bankruptcy estate has non-exempt assets from which creditors can be paid, the trustee will collect
the assets, liquidate them, and hold the proceeds for distribution to creditors. In the meantime,
the court will set a deadline for filing claims and notify all creditors to file their proofs of
claim before the deadline. The trustee can then object to claims if he or she believes them to be
invalid or excessive, and, after the creditor is given notice of the objection and an opportunity
to be heard, the Court rules on the trustee's objection. When the deadline for filing claims has
passed and all disputed claims have been resolved, the trustee will distribute the proceeds of the
debtor's assets to creditors. When the assets have been completely administered, the Court will
close the case. |
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In a chapter 13 case, the debtor must submit
a repayment plan. Creditors have an opportunity to object to the plan. If no one objects to the
debtor's proposed plan, the Court will enter an order confirming the plan as filed. Once the plan
is confirmed, the trustee will distribute the proceeds of the debtor's plan payments to creditors
until the debtor completes the plan or the court dismisses or converts the case. The Court will
issue an order discharging the debtor, and the trustee will prepare a final report, once the
debtor completes payments under the chapter 13 plan. In a chapter 12 case, the confirmation
hearing must be concluded within forty-five (45) days of filing the plan. The Court may consider
dismissal of the case if a plan is not confirmed. In a chapter 11 case, the United States Trustee
holds a debtor's conference before the creditors' meeting. At the debtor's conference, the United
States Trustee will go over the responsibilities and restrictions on the debtor-in-possession,
explain the quarterly fees and monthly operating reports, and generally discuss the financial
situation of the debtor and the scope of the anticipated plan of reorganization. |
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