What Happens When I File a Bankruptcy?


By:Michael A. Cibik

If you are about to file bankruptcy, your finances are probably disorganized. Your creditors are calling you, charging you crazy fees, and suing you, among other things. Once you file for bankruptcy, your finances become more organized because the automatic stay goes into effect, which means that your creditors can no longer take collection activity against you without the bankruptcy court’s approval.
The court will appoint a trustee who is responsible for paying your creditors. A month or two after your case is filed, you and your attorney will appear before the trustee for a hearing usually referred to as a meeting of creditors. Usually, the trustee asks routine questions about your finances. But as the name suggests, creditors have a right to come to the meeting and express any concerns they may have.
If you are filing a chapter 13 bankruptcy, your attorney will put together a repayment plan and file it with the court. The plans usually last for either three or five years. During that time, you will pay the trustee a fixed amount each month, and the trustee will pay your creditors the money you owe them. You must pay priority and secured debts in full, but you usually only pay unsecured debts as much as your monthly income allows. A secured debt is a mortgage, car loan, or other debt where the creditor loaned you money for something that can be taken away. Most other debts, like credit cards and medical bills, are unsecured. Priority debts include taxes, utility bills, and attorney fees, which, like secured debts, must be paid in full.
If you pay your bankruptcy plan payment on time each month, you can live your life without worrying which shoe will drop next. At the end of the three or five year bankruptcy period, your debts are discharged, and you are as good as new.

Michael A. Cibik, Esquire

Michael A. Cibik is a partner at the Philadelphia law firm of Cibik & Cataldo, P.C. He is one of the few bankruptcy attorneys in the Philadelphia area certified by the American Bankruptcy Board.

If you or someone you know is having financial problems, stop worrying and call Michael at (215) 735-1060 for a free consultation.


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