Filing for bankruptcy can give you a fresh financial start. But what happens after you file?
Several things occur when you file for bankruptcy in Arkansas, including an automatic stay and a creditors’ meeting. In this blog post, our legal team outlines the following events that happen when you file for bankruptcy:
- Automatic Stay
- Creditors’ Meeting
- Discharge Approval
- Creditor Objections
- Rebuilding Credit
The specific events that will occur vary on a case-by-case basis, but some commonalities arise in every case. If you need specific legal advice, contact Milligan Law Offices for a consultation.
1. Automatic Stay
An automatic stay is a court-issued order that prohibits creditors from collecting debts from you during bankruptcy proceedings. It puts an end to harassing creditors’ telephone calls and collection letters. Creditors cannot violate the automatic order, and there are penalties on the line for those who do, including fines, court costs, and attorneys’ fees.
In addition to creditor collection efforts, any wage garnishments will also cease. Wage garnishment violations will also result in legal consequences for the creditor. In short, an automatic stay protects you while going through bankruptcy.
2. Creditors’ Meeting
A meeting of the creditors, sometimes called a 341 hearing, is your first hearing after filing for bankruptcy in Arkansas. It allows the trustee and creditors to ask you questions about your finances and debts under oath. Despite the name, creditors rarely make an appearance at the meeting.
After you file for bankruptcy in Arkansas, the U.S. bankruptcy court will mail you and your creditors a formal notice. This notice contains the address, date, and time of your 341 hearing. Since the hearing isn’t scheduled in the courtroom—most 341 creditor meetings are held in a conference room located at the courthouse or an offsite building—there will not be a judge in attendance. The bankruptcy trustee conducts the proceedings instead.
These hearings are generally short, lasting just a few minutes. There are usually other filers in the waiting room with you until your case is called. Once you are called into the meeting room, you will be sworn in under oath and will provide testimony. The trustee will ask you some questions that confirm your identity and clarify information about your debts, assets, expenses, bills, income, and equity.
You will need to bring a few critical pieces of information with you to the creditors’ meeting, including your social security card and a driver’s license, passport, or other valid photo ID. If you cannot prove your identity, the trustee will continue your bankruptcy for another date. You should also bring a copy of your bankruptcy file with you to the proceedings. Your bankruptcy lawyer can arrange to obtain a copy of it for you.
3. Discharge Approval
If there are no additional questions or creditor objections, the trustee and court will begin preparing bankruptcy discharge papers. The trustee will conclude your creditors’ meeting, and you will not need to reappear at another hearing before the trustee. However, this does not mean that the court will issue discharge documents immediately.
Your creditors will have up to 60 days from the date of your initial creditors’ hearing to object to the bankruptcy. If no creditor objections exist, you should receive your bankruptcy discharge after this deadline.
4. Creditor Objections
It is unusual, though not impossible, to receive creditor objections. If creditors object to your bankruptcy, the trustee will need to continue your creditors’ meeting. This doesn’t mean that your case is in jeopardy, but creditor objections and information requests will increase the amount of time it takes to go through Chapter 7 or Chapter 13 bankruptcy in Arkansas.
If the trustee continues your hearing for a documentation request, it is essential that you folow through on their demands. Follow the provided instructions carefully and seek legal advice when you are unsure how to handle the situation. Leaving your case to best guesses could result in an unwanted outcome. Preparing a proper response to creditor objections and trustee continuances could speed things up substantially, depending on the facts and circumstances of your case.
5. Rebuilding Credit
The final event that occurs after you file for bankruptcy in Arkansas is rebuilding your credit. Even though bankruptcy remains on your credit report for 7 to 10 years, it still results in more financial freedom. You are no longer under a mountain of debt, and you can regain a good credit score by proactively managing your financial health over the long run.
Learn About Arkansas Bankruptcy Options
Chapter 7 and 13 bankruptcy matters in Arkansas are legally and financially complicated. You must meet several criteria to qualify, and your fate is in the hands of the trustee and bankruptcy courts. However, by filing for bankruptcy with the help of an experienced attorney, you can obtain the financial relief you and your family need.
Milligan Law Offices represents individuals and families throughout Northwest Arkansas and Eastern Oklahoma. Our Fort Smith bankruptcy lawyers will treat you with compassion and empathy throughout the entire bankruptcy process.
Schedule an Initial Consultation
Arkansas bankruptcy laws are complex. Milligan Law Offices offers our undivided attention to you and your loved ones so that you can understand your legal rights and options. Schedule your initial consultation with our office by calling (479) 783-2213 or by sending us a confidential message online.