Congratulations, your case is filed! Filing is the big day in bankruptcy. As of today, no creditor can take any action to collect a debt against you. They have to abandon any lawsuits against you, and they can’t call or email you anymore, they also can’t write negative things on your credit report starting today.
What sorts of things come as a surprise after filing? I will tell you about 3 common surprises with the process, what to look for on your credit report, and then what to expect next.
SURPRISE NUMBER 1: ALL DEBTS ARE AUTOMATICALLY INCLUDED IN THE BANKRUPTCY, EVEN THOSE THAT YOU WANT TO KEEP PAYING AFTERWARDS.
We can take loans with collateral like mortgages and car loans back out of bankruptcy again later by signing a reaffirmation agreement, but this process takes time. Sometimes mortgage and car loan companies give you bad customer service until after we have the reaffirmation in place.
SO HOW DO I PAY MY CAR LOAN OR MORTGAGE?
If you can’t pay online, then I recommend paying with a check in the mail or with bill pay through your checking account. Don’t use a money order because sometimes they don’t cash the money orders and it’s hard for you to see if the payment got applied or not.
SURPRISE NUMBER 2: YOU WILL GET LOTS OF LETTERS ABOUT THE FINANCIAL MANAGEMENT COURSE
DON’T DO THE COURSE FROM THE COMPANIES THAT SEND YOU LETTERS, THESE ARE MORE EXPENSIVE! We will send you a cheaper course instead.
Are you thinking that you already did the course? Well, there actually are 2 courses. You have done the pre-filing credit counseling already, but not the post-filing financial management course.
SURPRISE NUMBER 3: IN ABOUT 2 WEEKS WE WILL ASK YOU FOR YOUR BANK STATEMENTS AND PAYSTUBS AGAIN
This is because we must PROVE that the amounts we put on your paperwork are correct as of TODAY. I know it feels like we already have these items, but the bank statements and pay stubs don’t show TODAY because TODAY isn’t over yet, and it is TODAY that counts in bankruptcy.
What About Credit Score?
In a few weeks, each trade line on your credit report should start showing as a $0 balance included in bankruptcy. This is better than having a high balance and saying “late” “no payment” or “charge off” because the balance is now $0. In a month we will send more advice on rebuilding credit.
Want to learn more about credit score? Then make a free account on creditkarma.com to look at what is happening. If your score is under 600, I bet it will start increasing within weeks.
At the end of the process, we will request your credit reports to double-check that everything from the bankruptcy is showing correctly. It can take some months for everything to get updated, so let’s work on that later.
What Should You Be Doing Now?
Take a breath and relax! The hard part is over. In 3-7 days we will get a time slot for the hearing. The hearing itself will be in about a month and is usually by zoom or by phone. Your part takes about 5-10 minutes, but please set aside more time because the hearings can run late.
In about 10 days, we will reach out to get updated bank statements and pay stubs from you, and then we will call you a day or two before the hearing to go over all of the questions that you will be asked and explain how to answer those questions.