There’s a lot of talk about who should or should not file for bankruptcy. People talk about the pros and cons. They talk about the paperwork.
But many New Yorkers have no idea what happens after you file your bankruptcy petition. When you’ve decided to file, gathered the paperwork, and made the trip to the bankruptcy court, what comes next?
The answer, of course, depends on your unique situation and whether you’re filing Chapter 7, Chapter 13, or another type of bankruptcy. But some similarities apply to most cases.
That’s what we discuss in this article. Keep reading to learn what happens when you file for bankruptcy in New York.
Need personalized guidance for your New York bankruptcy case? Schedule a free consultation with New York’s No. 1 bankruptcy filer, Jacoby & Jacoby. Call 888-452-2629 or contact us online.
Creditors Stop Harassing You
If you’re sick of harassing phone calls and feeling like your creditors are about to take your property, you will like what happens immediately after you file:
The court immediately triggers the “automatic stay” — one of the most powerful tools in any debtor’s toolbox.
Whether you’re filing Chapter 7 or Chapter 13 bankruptcy, the automatic stay means creditors have to stop virtually all actions they have been taking or threatening to take against you.
That means their efforts to collect the debts you owe come to a screeching halt. While there are some exceptions to the automatic stay, it usually means that phone calls, letters, litigation, liens, and various other debt collection efforts must stop.
Your Credit Score Drops
Perhaps less appealing than the automatic stay is the other near-immediate effect of filing bankruptcy in New York: Your credit score drops.
Of course, most people who are filing for bankruptcy are not going to have particularly high credit scores. Still, the realization that the act of filing for bankruptcy harms your credit score can be difficult to accept.
It’s often helpful to remember, however, that bankruptcy is a tool meant to place you on the path to a better financial situation. Yes, your credit score will drop. But if your bankruptcy is successful and you make positive financial steps in the future, your credit score will recover.
You Send Documents to Your Bankruptcy Trustee
The notice will also tell you when the meeting of creditors (341 hearing) will occur for your case. Before this meeting (at least five days before), you will need to send various financial documents to your bankruptcy trustee.
The idea here is that the trustee will review the documents to verify various claims and figures from your bankruptcy petition. Documents you will likely need to send to your trustee include the following:
- Bank statements
- Tax returns
- Paycheck stubs
The trustee will review the documents and ask questions about them at your meeting of creditors.
You Attend the Meeting of Creditors
Before your bankruptcy case can be resolved, you will have to attend the meeting of creditors (called a 341 hearing). This is when your creditors can ask questions about and object to parts of your bankruptcy petition.
Many New York bankruptcy filers are understandably nervous about the 341 hearing. But there is some good news:
- This is often the only time you have to go to bankruptcy court. There’s no guarantee that further court appearances won’t be necessary, but often, the meeting of creditors is the only one.
- While your creditors can attend the meeting and ask questions, it’s quite common for them to not ask questions or even show up.
- If you’re working with a bankruptcy attorney, they will work to anticipate any issues that might arise at the hearing and resolve them beforehand. They will also attend the hearing with you.
- As of the time of publication, New York was allowing 341 hearings to happen over the phone.
These meetings rarely last for more than an hour — and many are quite a bit shorter than that.
On Your Way to Discharge
Following your 341 meeting, if you had filed a Chapter 7, you are as good as done. All that is required at this point is for you to hang tight until you get your final discharge paperwork in the mail. The discharge paperwork is important for you to hold onto as it is the definitive proof that your debts have been wiped out by the bankruptcy.
Following your 341 meeting in a Chapter 13, the trustee may request a few additional documents. It is necessary for you to get these documents to your attorney in order to confirm your Chapter 13 repayment plan. Confirming your Chapter 13 is essentially when both your monthly payment and the duration of your Chapter 13, typically three or five years, is locked in. Following confirmation, you will continue to make your monthly payments and work your way to discharge your debts!
Get Help from a Trusted NY Bankruptcy Law Firm
That’s what happens after you file your petition in a nutshell, although your case will have its own unique details.
Now that you know a little more about what happens after you file for bankruptcy in New York, you may be ready to take the leap and clear your debts once and for all.
If you want to protect your interests and ensure your bankruptcy is handled by a legal professional you can count on, contact the trusted bankruptcy attorneys at Jacoby & Jacoby. Fill out our confidential contact form or call our office at 888-452-2629 to schedule your free consultation today.