Is the Chapter 7 discharge the end of the bankruptcy process? What happens next? These are some of the most common questions we receive from clients wanting to know what life may be like after bankruptcy. Here is a general overview of the end of the bankruptcy process and what might follow.
The End of the Bankruptcy Process
In rare cases, the trustee will need to liquidate property or resolve bankruptcy litigation. If you’ve received a discharge through Chapter 7, however, your bankruptcy proceeding is most likely complete. The trustee will submit a final report, and the court will follow this with a final decree. This finalization will generally occur 4-6 months after filing your petition.
On your credit report, discharged debts should be marked as discharged. Your bankruptcy case will stay on your report for 10 years, but the impact of bankruptcy on your ability to obtain credit will diminish over time.
Any debts that were reaffirmed (rather than discharged) will need to be paid, and your creditors and lenders will be released from the automatic stay. You may need to pursue additional forms of relief to avoid foreclosure or repossession, but this relief may be easier to access now that less of your income will be going toward your debt.
Creditors who owned debt that the bankruptcy court discharged may continue to contact you. We recommend telling them you filed bankruptcy and giving them the contact information of the attorney who helped you file. The public can access bankruptcy filings, which is why you are not obligated to give them additional details.
Maximizing the Benefits of Bankruptcy
Ultimately, what you can expect to happen next will all depend on you. Your decisions will dictate how quickly you recover from bankruptcy and how easily you can avoid common pitfalls.
To maximize both the short-term and long-term benefits of this financial fresh start, we recommend the following steps:
- Keep all documentation. This can help you obtain new credit, as well as resolve disputes with creditors who were included in your bankruptcy petition.
- Verify information on your credit report. Creditors and reporting agencies make mistakes more often than many would believe, and bankruptcy makes substantial changes to your financial situation that you must assess for accuracy. You have the right to dispute information and compel agencies to make corrections as needed.
- Establish a realistic budget. There is no shortage of apps and other free online resources you can use to keep track of your finances and establish achievable goals. You can also use the information you learned in your credit counseling sessions, as well as the income and budget data in Schedules I and J of your case.
- Develop a strategy for remaining debt. Bankruptcy will not discharge every type of debt. Without the unsecured debt on your shoulders, however, you will likely have an easier time making payments on secured debt. As your credit improves, you might be able to access new options, such as consolidation loans with better rates and terms.
- Rebuild your credit. While debt is what led you to file bankruptcy in the first place, there are ways to rebuild your credit without accumulating unmanageable debt. For example, you may want to take out a secured credit card, use it for a very specific purpose (e.g. gas or groceries), and pay it off at the end of each month. Continuing to make rent payments or auto loan payments will also help you improve your score.
Bankruptcy has a clear beginning and end. However, just like you need to prepare for bankruptcy, you must also plan for life after bankruptcy. With thoughtful preparation and intentional financial decisions, you can slowly build solid financial foundations that clear the way toward a prosperous future.
Let Us Help You Navigate Life After Bankruptcy
At The Buchalter Law Group, our attorneys are committed to helping individuals such as yourself derive maximum benefits from bankruptcy. As such, we are here to assist you at every stage—from preparing for your case to making the smartest possible decisions after your case is closed. With our knowledgeable guidance, your bankruptcy can be the fresh financial start you need.