What happens to you when you die?
The Bible teaches us that human beings are made in three parts. "Now may the God of peace Himself sanctify you completely; and may your whole spirit, soul, and body be preserved blameless at the coming of our Lord Jesus Christ" (I Thessalonians 5:23). Your body is that part of you which is tangible, that is your physical body. Your spirit is that part of you which is made in the image of God (Genesis 1:26-27). The soul is your life, the part that makes you a living being (Genesis 2:7).
Death, then, is when your soul -- your life -- separates from your physical body. Without life, the body undergoes decay and returns to the dust of the earth. The spirit, however, returns to God. In Ecclesiastes, Solomon portrays the body as a container (tent, bowl, or pitcher) that holds the spirit. "Remember your Creator before the silver cord is loosed, or the golden bowl is broken, or the pitcher shattered at the fountain, or the wheel broken at the well. Then the dust will return to the earth as it was, and the spirit will return to God who gave it" (Ecclesiastes 12:6-7).
From the parable of the rich man and Lazarus we conclude that there is a place of waiting that is composed of two parts. "There was a certain rich man who was clothed in purple and fine linen and fared sumptuously every day. But there was a certain beggar named Lazarus, full of sores, who was laid at his gate, desiring to be fed with the crumbs which fell from the rich man's table. Moreover the dogs came and licked his sores. So it was that the beggar died, and was carried by the angels to Abraham's bosom. The rich man also died and was buried. And being in torments in Hades, he lifted up his eyes and saw Abraham afar off, and Lazarus in his bosom. Then he cried and said, 'Father Abraham, have mercy on me, and send Lazarus that he may dip the tip of his finger in water and cool my tongue; for I am tormented in this flame.' But Abraham said, 'Son, remember that in your lifetime you received your good things, and likewise Lazarus evil things; but now he is comforted and you are tormented. And besides all this, between us and you there is a great gulf fixed, so that those who want to pass from here to you cannot, nor can those from there pass to us.' Then he said, 'I beg you therefore, father, that you would send him to my father's house, for I have five brothers, that he may testify to them, lest they also come to this place of torment.' Abraham said to him, 'They have Moses and the prophets; let them hear them.' And he said, 'No, father Abraham; but if one goes to them from the dead, they will repent.' But he said to him, 'If they do not hear Moses and the prophets, neither will they be persuaded though one rise from the dead'" (Luke 16:19-31). The two parts are separated such that there is no movement between the parts. One side is referred to as Torments and is described as a place of suffering. The other is referred to as Abraham's bosom and is a place of comfort. Jesus referred to the good side as "paradise" when talking to the thief on the cross (Luke 23:43).
Neither place is the finally abode as the Bible speaks of a final judgment before God. "For we must all appear before the judgment seat of Christ, that each one may receive the things done in the body, according to what he has done, whether good or bad" (II Corinthians 5:10). Or as Jesus described it, "Do not marvel at this; for the hour is coming in which all who are in the graves will hear His voice and come forth--those who have done good, to the resurrection of life, and those who have done evil, to the resurrection of condemnation" (John 5:28-29). After this judgment, the souls are sent to their eternal destiny. "And these will go away into everlasting punishment, but the righteous into eternal life" (Matthew 25:46).
One popular concept you will not find in the Bible is that of purgatory: a place where people can atone for their "minor" sins by paying for it with sufferings for a season. While the wicked do suffer while waiting for judgment, you must remember that Abraham said that there is no crossing between the realms in the grave. Also recall that Paul had said we will be judged by the deeds done in the body. Once you are dead, your fate is sealed. You destiny depends on your behavior while you live.