Most secured loans, such as mortgages and car loans, demand that if you want to keep your secured item (your house or car) you must reaffirm. This involves signing a document, usually in the form of a one page document, stating that you agree to pay this debt and if you do not, they can contact you and, if payment is not made, they can repossess this debt. This insures that the loan company will not come take your car, since you have agreed to make your regular payments and this ensures for the loan company that they do not fall under the regular provisions as other credits who are subject to dismissal through your bankruptcy.
If you have secured debt, such as in the form of a computer superstore for the purchase of a home computer, the creditor may show up at the 341 hearing (meeting of the creditors) to ask if you still have the item your used the credit card to purchase. I used to attend 341 meetings for an attorney that I worked with a few years ago. Only once did I see a creditor show up at the hearing, asking about the item. They are allowed to ask for it back. The only times I have heard of this happening is when someone purchases a new item, such as a new home computer, television set, etc a few days prior to when your bankruptcy was filed. If it has been a while, usually about 1 year, they do not want the items back because they are used and not in the same condition that they were when you purchased it.
The meeting of the creditors is usually handled by the trustee who has been appointed to serve over your case. The hearing is handled in an office, not a court. You, the debtor, will sit across a desk from the trustee with your attorney by your side. The trustee will ask you if your petition is complete and accurate to the best of your knowledge.
Student loans can never ever be included in bankruptcies. They will be listed in your petition, but student loans are not discharged. This is the only debt that I am aware of that is unable to be dismissed.
Once your petition for bankruptcy is filed with court, all creditors who are listed in your petition are forbidden from contacting you. This violates the bankruptcy protection that is issued to your at the time you file for bankruptcy. When you attorney prepares and files your petition, he will send a letter to your creditors included in your petition, advising them that they are not allowed to contact you. Should you receive phone called from creditors, you need to let your attorney know.
During the time you file, until you are discharged (which means your case is completed and dismissed as an active file with court) you are not allowed to incur any additional debt. If, for some reason you do, you will be 100% responsible for this debt. I would not recommend applying for and receiving credit during this time. The trustee will normally ask if you have any other debt than that listed in your petition and it will not bode well if you recently took out another credit card, loan or the like. It will demonstrate to the court that you are not filing for bankruptcy for any other reason than you don’t want to have to pay it. Bankruptcy protection is for those who will be in a dire situation if you do not receive protection and relief from your creditors.
About 4 months after your 341 hearing, your bankruptcy will be discharged, which means the debt included in your petition is forgiven and you are not liable for the debt. You will receive a letter from court enclosing a copy of the discharge notice. You will need to keep this in a file for future use. You may be asked to provide a copy of it to creditors who do not have your file marked that you filed for bankruptcy or for new creditors who want to confirm that you have been discharged.
Bankruptcy stays on your credit report up to ten years. If your debt would take you ten years to pay off, bankruptcy might be something to consider. Bankruptcy lowers your credit score, but so does bad payment history, such as paying late or not paying at all. You need to sit down and decide which is the best option for you.
