What Happens After You File Bankruptcy?

Finding yourself trapped in an unsustainable financial situation is not just extremely stressful; it can also be damaging to your reputation, put stress on your home life, and even impact your ability to cover your family’s basic material needs. This is why many people who find themselves drowning in debt turn to bankruptcy.

Bankruptcy is a powerful federal tool that allows struggling debtors to restructure and discharge the financial obligations that are crushing them and their families. Most people are aware of what bankruptcy is, but many do not fully understand the process. Bankruptcy can be quite complicated, and there are several different forms of it to consider.

When you first file for bankruptcy, you will file your voluntary petition with the court and then pay the associated filing fee. Even this process can differ depending on whether it is an individual with limited means filing for Chapter 7 or a large corporation filing to reorganize debts under Chapter 11. And from there, the processes will only diverge even further. For that reason, it is best to examine the timeline for each common type of bankruptcy separately.

What happens after you file bankruptcy?

What Happens After You File Chapter 7 Bankruptcy

  1. Once you have filed your case, the first thing the court will do is review it to see if you have all the necessary information in the required formats. If the court feels any statements or evidentiary documents are not sufficient, they will move to dismiss your case at this very first step. To avoid these sorts of disastrous mistakes, it is worth investing in quality legal help from the bankruptcy experts at Steele Law Firm, PLLC, of Fort Worth.
  2. Tax returns for the most recent year must be submitted to the court. These do not have to be part of your initial filing but must be provided within a week of the first meeting of creditors.
  3. The court will set a date for a meeting of your creditors 21 to 60 days after you have filed your bankruptcy case. Here, the process of restructuring and discharging debts will begin. You must attend this meeting.
  4. While the legal proceedings begin, you will be simultaneously enrolling in financial management education. Within 45 days of the first meeting with creditors, you will be expected to provide the court with a certificate showing you have completed the financial management course. This is intended to demonstrate that you will be capable of making better financial decisions going forward.
  5. Reaffirmation agreements (restructured and renegotiated debts, essentially) should be filed within 60 days of the meeting of creditors, barring any extensions.
  6. Once the obligations set forth in the reaffirmation agreements have been met (i.e., your assets have been sold off to satisfy your debts), the court will issue an order legally discharging said debts. Unless there are any objections or outstanding issues, this marks the final phase of the Chapter 7 bankruptcy process.

What Happens After You File Chapter 11 Bankruptcy

  1. In a Chapter 11 proceeding, wherein a corporation, business, partnership, or other organization is typically the filer, there are prerequisite steps to be completed before the case ever begins in earnest. To be eligible for Chapter 11, credit counseling must have begun 180 days prior to filing.
  2. The filing of the petition for Chapter 11 can be a bit more involved than in an individual Chapter 7 or Chapter 13 case. You must provide a complete list of creditors and pay a filing fee that can be steeper than those for other sorts of bankruptcy cases.
  3. The initial hearing should occur within 48 hours of your initial filing, so long as everything was filed properly and completely. At this point, the reorganization has begun, and creditors are no longer allowed to contact you directly.
  4. A “creditors’ committee” (analogous to the “meeting of creditors” held in individual bankruptcies) is convened around two weeks after the initial filing. This is handled by the Office of the US Trustee, a special office of the federal government that will help facilitate the bankruptcy case. In complex Chapter 11 cases, a committee of certain creditors will be assigned to make decisions in the best interests of all involved creditors. This keeps the committee manageable.
  5. After a month or two, another meeting of creditors will be held. You and the trustee must be at this meeting, although your creditors are not legally obligated to attend.
  6. After about 4 months of proceedings and negotiations, a reorganization plan should be in place. This is the legally binding agreement that says how debts will be restructured and repaid and must be submitted to the court for approval. Typically, your bankruptcy attorney will formulate the first version of this plan, and then creditors will have the opportunity to reject it and provide a counterproposal.
  7. Once the repayment plan has been agreed upon, the debts will be discharged. One of the benefits of Chapter 11 bankruptcy is that the business can continue its operations throughout this entire process.

What Happens After You File Chapter 13 Bankruptcy

  1. As with a Chapter 7 case, the first step the court will take after you file for Chapter 13 bankruptcy is to thoroughly review your filing and move to dismiss it if they find it to be incomplete or insufficient.
  2. A trustee is assigned within 30 days of opening the case. Payments to this trustee can usually begin right away.
  3. Tax returns for the most recent year must be provided to the trustee (not the court itself) within 7 days of the first scheduled meeting of creditors. Before this meeting takes place, valid tax returns for the prior four years must have also been filed with the IRS and the State of Texas.
  4. The first meeting of creditors takes place any time from 21 to 60 days after your initial filing. Any objections to the terms agreed upon at this meeting must be made within 21 days after its conclusion.
  5. Just like with Chapter 7 bankruptcy, financial management education must also be undertaken before debts will be discharged.
  6. Once repayment plans have been approved and all deadlines for objections have passed, the court will officially discharge the debts.


Q: What Is the Downside of Filing for Bankruptcy?

A: There are many varying downsides (and benefits) to filing for bankruptcy, and each individual case will be unique. In Chapter 7 bankruptcy, for example, you will be forced to sell off most of your assets to pay off outstanding debts. In other types of bankruptcy, you may be subject to long repayment plans. Bankruptcy is also not universally available—you must meet income thresholds to file, and you cannot use bankruptcy again for several years after filing.

Q: Do You Get Out of All Debts If You Declare Bankruptcy?

A: Not always. Just as certain assets may be exempted from the bankruptcy process, certain debts are as well. Federal student loans notoriously fall into this category. Most other private debts will be effectively wiped out after the terms of the bankruptcy have been satisfied, however. The qualified bankruptcy attorneys at Steele Law Firm, PLLC, of Fort Worth can help you determine what debts can be discharged.

Q: Is It Better to Pay Off Debt or File Bankruptcy?

A: Most people naturally feel better about paying off their debts themselves. The reality, however, is that everyone struggles sometimes. There are many situations where entering into the bankruptcy process is the best available option for everyone involved—you, your family, and even your creditors. Do not let pride get in the way of claiming a second chance that is legally available to you.

Q: What Is the Next Step After Bankruptcy?

A: The next step after a successful bankruptcy proceeding is to get back to living your life. Bankruptcy is designed to restructure your financial obligations to take a great weight off your shoulders and give you your life back. Make the most of the opportunity by making wise financial decisions and staying out of debt whenever possible.

Steele Law Firm, PLLC: Texas Bankruptcy Attorneys

If you’re ready to free yourself from the financial struggles that just seem to keep piling up, contact the bankruptcy experts at Steele Law Firm, PLLC. We can use our vast experience to keep your case on track and guide it to the best possible outcome.

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