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What Happens When You File a Chapter 7 Bankruptcy?



When your attorney files your Chapter 7 bankruptcy case, an automatic stay requires creditors to stop collecting your debt. Although the court will send a notice to your creditors about your bankruptcy case, it may be necessary for your attorney to contact some creditors before the court sends out notices if you have a garnishment, repossession, upcoming court hearing or another urgent matter where a creditor needs immediate notification.


The bankruptcy notice contains a date and time for your 341 meeting of creditors. When you file bankruptcy, your creditors may attend the hearing and ask you questions about your finances. Most of your creditors will not appear at the hearing. Car finance companies and credit unions are creditors that are more likely to appear at the hearing.


Besides creditors, a Chapter 7 trustee will review your bankruptcy petition, schedules and statements and ask questions about the information on them. Trustees also have standard questions they ask everyone to verify that the bankruptcy documents contain correct information.


After your court hearing, creditors have sixty days to object to your bankruptcy discharge. After sixty days have passed, the court will issue your discharge canceling your dischargeable debt. You will receive a copy of the discharge in the mail. The bankruptcy can stay on your credit report for up to ten years, but it does not take ten years to rebuild your credit. In fact, you can usually rebuild your credit in two or three years.

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