What happens after I file bankruptcy?
Filing a bankruptcy is just the start of eliminating your debt. Very often we see pro se debtors (who represent themselves), debtors who hired a bankruptcy petition preparer (who simply files the case on your behalf), and even our own clients, hurt their case by failing to follow up on their obligations subsequent to filing the case in bankruptcy court. This post is designed to help raise awareness of issues that may hurt or prevent a successful completion of a Chapter 7 or 13 case.
Most people file bankruptcy for two reasons: (1) the automatic stay imposed by section 362 of the bankruptcy code, which prevents creditors from pursuing you for debts owed as soon as the bankruptcy case is filed, and (2) the discharge injunction, which prevents creditors from ever attempting to collect those obligations in the future.
The automatic stay is … automatic upon the filing of the bankruptcy (with a few exceptions, namely repeat filings). The discharge, however, is something that we have to work for by successfully completing the bankruptcy case.
Where do most of our clients slip up and do something that might cause the court to fail to issue the discharge, revoke the discharge, or dismiss the bankruptcy case?
Chapter 7 (Liquidation)
- Failure to attend the meeting of creditors required by Section 341 of the bankruptcy code (the “341 Meeting”), or failure to provide documents required by the bankruptcy code or trustee could cause your case to be dismissed.
- Failure to pay the trustee in a situation where the bankruptcy estate is owed money because the debtor has non-exempt assets, will cause the discharge to be revoked.
- Failure to file your tax returns, or a failure to pay the non-exempt portion of your refund to the bankruptcy trustee will cause the case to be dismissed, or the discharge to be revoked.
- Failure to disclose and remedy any post-filing issues (like the inheritance of money within six months of filing the case) may cause your discharge to be revoked.
Chapter 13 (Reorganization)
- Failure to attend the meeting of creditors required by Section 341 of the bankruptcy code (the “341 Meeting”), or failure to provide documents required by the bankruptcy code or trustee could cause your case to be dismissed – similar to a Chapter 7 Liquidation case.
- Failure to pay the trustee the monthly payments will cause the case to be dismissed.
- Failure to file your tax returns, or a failure to pay the non-exempt portion of your refund to the bankruptcy trustee will cause the case to be dismissed, or the discharge to be revoked. Note that this is similar to the requirement in a Chapter 7, but because of the nature of the 13, you have the responsibility to send your tax return to the trustee every year that you are in Chapter 13. The two trustees in Tampa will allow you to keep some or all of your return, upon a written request submitted to the trustee, with supporting documents, prior to receipt (or prior to spending) the refund.
- Failure to disclose post-filing issues, like an inheritance, settlement of a lawsuit that arose prior to or after filing the case, an increase in income (like a raise), an increase in expenses that may necessitate a decrease in the monthly payment, or the need or desire to incur additional debt (like a need to get a new car) may cause the case to be dismissed.
We wrote this blog post to also serve as a guide for our clients, so that they know their rights and responsibilities after filing, to avoid a revocation or denial of their bankruptcy discharge.
For more information on bankruptcy, Chapter 7 Liquidation, or Chapter 13 Reorganization, please contact us to schedule a free initial consultation to discuss your options at 727-261-0224 or email me directly at email@example.com. Please also subscribe to the Crushing Debt Podcast, on Apple Podcasts, Spotify, and other podcast players, including Amazon Echo (“Alexa”) for more free information about these topics.
Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Tampa-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Clearwater, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.