Bankruptcy discharge releases a debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer required to pay any debts that are discharged. This permanent order prohibits the creditors of the debtor from taking any form of collection action on discharged debts including telephone calls, letters, and personal contact. The process of bankruptcy discharge begins with a 341 meeting of creditors. During this meeting the debtor is placed under oath and asked questions regarding assets and liabilities. The creditors are invited to this meeting but very rarely do they attend. Within 10 days of the 341 meeting a trustee will report to the court whether the petition should be considered an abuse of the bankruptcy code. The creditor has 60 days after the 341 meeting to file an objection to the bankruptcy petition. If the creditor contests, the debtor may have to appear in court.
The duration of a discharge depends on the type of bankruptcy. A Chapter 7 bankruptcy can to take 60 to 90 days and a Chapter 13 bankruptcy can take up to 3 years. Finally, a bankruptcy clerk will issue a discharge order to the debtor, creditor, the trustee on the case and the US Trustee. The order informs the creditor that the debtor no longer owes the debt and any attempt to collect is a violation of a court order. After filing for bankruptcy all is not lost. A person can repair their credit and be able to buy a car if they practice good financial habits and are willing to take some difficult steps. The first thing one should do is begin the process of rebuilding their credit. Start by calling 10 local banks and explain to them that you have filed for bankruptcy, received your discharge and would like to apply for new credit. Ask them if they can qualify you for an unsecured credit card.
If not, request a secured credit card. A secured credit card requires you to keep the equivalent of the card’s limit on deposit with the card’s issuer. So a secured card with a $250 limit requires you to deposit $250 with the bank that issued it. You will get the $250 back once you close the account in good standing. An unsecured credit card does not the have the same restrictions. This is the line of credit that is most commonly offered. You should also make sure that your account is reported to the major credit agencies. Once you receive your card make sure to use it at least once a month and pay the balance in full every time.
It is possible to buy a car after you have begun the process of rebuilding your credit; in fact entering in to a car loan is the best way to rebuild credit after bankruptcy. Start by doing research with local dealerships. Inform them of your situation and make sure you have a copy of the order of discharge. Many dealerships now have special financing departments or credit rebuilding programs and are willing to work with you. Your bankruptcy attorney may also be of some assistance. They often have a list of dealerships that will work with someone who just filed bankruptcy. The attorney would send a letter to the dealership letting them know that the bankruptcy has been through the court and any new bills cannot be added so the dealer is safe from debts being cancelled. Also once the bankruptcy is official you may start to receive offers in the mail from local dealerships to buy a new or used car.