Over the years I've seen so many folks ask questions regarding what happens right before and after they file for Bankruptcy. There seems to be a gray area of what we should be doing, if anything, while waiting for Discharge. This reference guide will help answer some of those questions, maybe not all, but at least give you a general idea. From filing to DC is usally about 3-4 months depending, with average being 3 months.
This is just a general guide, and not everything, but will give you an idea of what to expect, and of course if you ever have any questions regarding the process, please feel free to post them here, as we have several members, including myself, who have all been through the BK process! We are here to help! I will add to this thread as needed, and if you also have any suggestions you'd like to me to add, PM me!
COMMON ABBREVIATIONS:
BK/BK7/BK13 = Bankruptcy/Bankruptcy Chapter 7/ Bankruptcy Chapter 13
MOC = Meeting of Creditors
DC = Discharge
CC = Credit cards
IIB = Included in Bankruptcy
DL = Driver's License
SSC/SSN = Social Security Card/Social Security Number
PRE-FILING FOR BK:
- OK...so you've decided to go ahead and file for Bankruptcy. I would start by googling Bankrutpcy Laws for your state, and do a little research regarding it, and do a practice "means test" for your state as well. Most common BK's areBK7 (total liquidation, assest/non-assest) & BK13 (3-5 year payback plan) filings, and the means test will depend a lot on which one you'll be most likely be able to file.
- You can also file your own BK to save money, by researching, How to file for BK without an attorney for your state, and then download the template to fill out. There's a lot involved, and even though we dont recommend this style due to all the specifics involved, its an option available. We have a few posters who filed their own BK here on the forums, and they can help answer questions regarding this. One poster is @CreditInspired .
- Next, do your research on attorney's in your city who specialize solely in BK's, and make an appt with a couple of them (consults are usually free), and they tell you their price for filing up front, which can be anywhere from low end $1000 up to $2500, depending on how big your BK is, what type, and the details. For Example...assest vs non-assest, etc, and also where you live play a role in price.
- Before you file, your attorney might recommend that you STOP making payments on you CC's, and other creditors, and to move your banking to a bank or CU that you wont be burning in the BK. This is because once you file, all your lenders/creditors will get notice of your filing, and some will suspend your banking accounts you have with them, especially CU's due to the cross collateralization clause most have, and your other accts will be closed.
- "Can I pay a few lenders before I file"? Answer is , no. That would be considered "preferrential treatment of a creditor", and could get your BK dismissed once the trustee finds out, and they will find out, as you'll be providing all sorts of documents to your attorney for the filing such as, W2's, 6-12 mo of pay stubs, insurance policies, credit card statements, etc.
- With that said....you can pay your livable bills...like house, car, (if you're not already behind in payments), electricity, food, medical needs/medication...the basic needs. You cant go crazy before filing and charge up all your CC's, as that is fraud, and you should STOP using your CC's at least 90 days before filing!. Your attorney will advise you on everything pre-filing in your initial consultation.
Here is a great thread from poster @Tuscani to refer to BEFORE filing as well......
https://ficoforums.myfico.com/t5/Bankruptcy/Bankruptcy-pre-planning-tips/m-p/5680446#M65510
FILING:
- So you've had your consultation, did the means test, paid your attorney. Your attorney will tell you what date they will file your particular BK on (7 or 13), and will also let you know what you need to be doing in the meatime, like any paperwork you need to start getting together for the next step of the process......which will be your MOC. That takes place usually 30-45 days after your filing.
- During this time of actual filing, the CRA's will pick it up almost immediately, and your credit scores will drop drastically. (mine dropped 150 pts once they got wind of the filing). DO NOT BE ALARMED! This is all normal, and typical. Eventually over the next couple of months, your scores will start rebounding. One by one your accounts will start closing on your reports once the lenders have received notice as well, and your scores could take another dive. Again, dont be alarmed!!
- Once you filed for BK, you now have the protection from the federal BK courts, and the "automatic stay" is now in place. This means, NO lender/creditor can try to collect on any account...period. You can now answer your phone! Its ok! Tell them you filed for BK on such and such date, and give them you BK attorney's name and #. That will be the last you'll hear them. If they continue to call you, have your attorney take care of it.
- Now that you're filed, you can go on with your daily life. While you're waiting for your MOC to happen, provide your attorney with whatever they are asking for as far as paperwork, as they will be forwarding it to the the trustee now assigned to your case. Dont forget to relax, breathe, trust in the process, and it will all be over with soon. Register with PACER and follow your BK filing.
MOC:
Your MOC is finally here. First, dont panic! It will be over in 5-10 min, not kidding! Make sure you brought with you your DL and SSC for verification!
~ Don't dress to the nines...You're filing BK, you dont want to look like you just stepped out of Neiman Marcus or Brooks Brothers! You want to look like you cant afford anything! Actually, jeans and a casual shirt is OK. Ladies, dont take the designer purse in with you, minimal make-up, casual attire...leave the jewelry at home as well. See where I'm going with all this?? Look like you needed to file your BK.
- The MOC is actually just that. Most creditors DO NOT show up, but in the off chance one does, you and your attorney will already have known beforehand, so its not a surprise. Let your attorney handle things.
- You will sit in the court room with your attorney waiting for your name to be called. Once called, you and your attoney will stand, and walk to the front, and will be sworn in under oath in front of the trustee and the judge overseeing things. They will basically ask you to verify your name, DOB, etc.. If the trustee asks you a direct question, answer it honestly. He or she will then tell you that they are done, and call the next person. Then you leave! You're done with your MOC!
- At this point your attorney may tell you its ok to go ahead and start rebuilding. We highly advise you to NOT try until after your official DC!! A lot can happen from the time of MOC to DC, like your case could get dismissed for presumption of abuse/fraud, the trustee may decide to convert your BK7 case to a BK13 instead. Just dont chance it, and just wait.
- While waiting for your DC, you should be montioring your reports to make sure everything is updating to show $0 balance and the included in bankruptcy comment on each account. Your scores will also be flucuating hopefully for the better at this point and start rising. Also, take this time to read the following threads for rebuilding. They have good information
These threads are posted in the next comments
DISCHARGE!!
You're finally discharged, YAY! Congrats on your new founded freedom and you can now start the rebuilding process. Here are a few great rebuilding threads to refer too for rebuildig. As always...post your questions you have, start your own thread with questions, but regardless everyone is here to help, and are either in the same boat you are, or have already been there.
https://ficoforums.myfico.com/t5/Bankruptcy/Bankruptcy-Friendly-Credit-Cards-Pt-2/m-p/3999737#M27903
***FOR BK13***.....
Filing and MOC is the same, but in a BK13 which is payback plan, the plan is 3-5 years, depending on what the trustee decides. You also have to get permission from the courts/trustee for any credit/loans of any kind while still in the plan. They will have to approve it while you're in your payback plan for those years. A BK 13 will DC at the end of their completed payback time frame.
"How long does a BK stay on my reports?"
BK7- 10 years from FILE date
BK13- 7 years from file date
Converted BK13 to a BK7- Still 10 years from original BK13 file date.
Dismissed BK7-10 years from date
Dismissed BK13- 7years from file date.
@pizza1 you made short work of a "life happens" process. Awesome as it is straight forward, simple to read (if anything about BK is simple) and provides the needed step by step information. Sure wish this were something we had back in the day! Helps to take the scary mystery of BK and brings it back home. Nice job!
Great post! The only thing I would add to the MOC heading would be to not forget to bring your social security card with you.... Seen too many posts where people forgot and had to get rescheduled.
Great post! I am learning more about BK process as my brother currently was dischagred and working on helping him rebuild.
@pizza1 wrote:
@gorgon wrote:
Great post! The only thing I would add to the MOC heading would be to not forget to bring your social security card with you.... Seen too many posts where people forgot and had to get rescheduled.
@gorgon , Noted and thank you!! Hopefully the attorney has reminded their client what to bring.
Yes, good point. I did get by with tax documents with my Social Security # on it, but not recommended. I lost my SS card when i was young and went 20+ years without an actual card. But just a few years after my BK7 I started working for my local county government and they absolutely would not accept anything but an actual card. I had to go the the Soc. Sec. office and was surprised it only took 15 minutes to complete the app for a replacement card. They gave me a signed letter with my Soc. Sec. # on it that was good enough for the county and a few weeks later my card came in the mail. Now I keep it in a very safe place. So, if for any reason you don't have a Soc. Sec. card stop by your local SS office and apply for a replacement well before your MOC.
And, terrific post @pizza1 !!!! Glad it's a sticky to answer alot of questions that get asked over & over again.