People sometimes think that filing for bankruptcy is a way for them to quickly wipe the slate clean and start their financial lives anew. While it does give you a fresh start in many cases, going bankrupt isn’t a quick fix, nor is it without its responsibilities. You’ll have a few tasks to complete once you file and will have to keep working to restore your credit and your financial life in the years to come.
Meet with Your Trustee
Whether you file for Chapter 7 or Chapter 13, the court appoints a trustee to oversee your case. The trustee is a neutral party who’s responsible for reviewing your documents and making sure they are accurate. After reviewing your paperwork, the trustee will call you in for a meeting of the creditors, which usually takes place about 30 days after you file. The people you owe can be at the meeting, and they can question you during it. But, it’s usually only the trustee who questions you during the meeting, about the information you provided in your bankruptcy documents. You are under oath during the hearing and need to answer honestly.
Follow Repayment Plan
When you file for Chapter 13 bankruptcy, you also need to submit a repayment plan with your paperwork. The plan describes how you will pay back your debts within a three to five year time period. What you end up paying under the plan depends on the type of debt you have and your income. You’re responsible for making payments under the plan to your trustee, who distributes the appropriate amounts to your creditors and keeps a portion of the payment as a commission.
Pay Nondischargeable Debts
Filing bankruptcy doesn’t eliminate certain types of debt, known as nondischargeable debts. That means you are responsible for paying those debts even after you file. You make payments on priority debts, such as child support and alimony, through your repayment plan if you filed Chapter 13. You make payments on non-priority nondischargeable debts, such as student loan debt, after your discharge. During the filing process, you might qualify for a forbearance on your student loans, which means you are exempt from paying them until your financial hardship is over. If you file Chapter 7, you will continue to make payments on nondischargeable debts after you receive the discharge.
Rebuild Credit and Financial Life
One of the biggest responsibilities you’ll face after filing for bankruptcy is rebuilding your credit and your finances. Bankruptcy lowers your credit score and lingers on your report for years.
Part of getting back on your feet involves completing a debtor education course, which is required before you can receive your discharge. Another part of rebuilding your finances is putting what you learned in the course and during pre-filing counseling into practice. You’ll want to create and stick with a budget, and review it on a regular basis from time to time to make sure it something that still works for you.
You might also want to focus on learning to use credit wisely, so that you don’t end up overwhelmed by debt again. You might start out by applying for a secured credit card, then working your way up to a non-secured card after about a year. When you do use the card, pay off the balance right away and only use it when you know you can make a payment immediately.
If you need help rebuilding your credit or managing your finances, we can help. CESI has helped thousands of people get their lives back in order after overwhelming debt.
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