Millions of people have lost income and found themselves drowning in debt in recent months. Bankruptcy can be a solution to ending the financial stress that affects every part of your life. How long does it take to file bankruptcy and regain some control over your financial future? Depending on the type of bankruptcy you file, it can take just a few months or several years. Here are the details of Chapter 7 and Chapter 13 filing times.
How Long Does Chapter 7 Bankruptcy Take?
Chapter 7 bankruptcy wipes the slate clean of most debts for individuals who have insufficient income to repay their debts under a Chapter 13 debt consolidation plan. Chapter 7 is the quickest route to bankruptcy debt relief, but you need to pass a means test to determine if you qualify.
The means test involves filling out forms to determine your financial eligibility and is the first step in a bankruptcy process that typically lasts 3-4 months. You’ll be asked to fill out paperwork that verifies your income, assets, debts, and financial transactions. Gathering the appropriate information is often one of the most time-consuming tasks for individuals filing bankruptcy.
Once the court has received all the appropriate paperwork, you’ll be notified of a hearing date for a 341 Meeting of Creditors. This meeting is required but relatively painless, usually taking no more than 10-20 minutes. Your 341 Meeting of Creditors will typically be scheduled about 30 days after you initially file.
After the 341 Meeting of Creditors, all trustees have a period of 30 days to either object or discharge the debt in your name. This deadline is longer for secured debts or if the trustee requests a follow-up hearing.
Objections are uncommon, but they do occasionally occur. If you’re working with a limited number of trustees and they all quickly agree to discharge any debts, this can shorten the bankruptcy process by a couple of weeks.
The last step you’re responsible for in a Chapter 7 bankruptcy is attending a financial management/credit counseling course. These are two mandatory courses that need to be completed within 60 days after your 341 Meeting of Creditors.
Generally speaking, a Chapter 7 bankruptcy is discharged by the court within 60 days of the 341 Meeting. Factors such as the complexity of your bankruptcy case, trustee objections, and not moving in an expedited manner to ensure all your requirements are meant can lengthen this time. For most people filing Chapter 7 bankruptcy, the entire process takes an average of 4 months.
How Long Does a Chapter 13 Bankruptcy Take?
Chapter 13 bankruptcy is different from Chapter 7 in that instead of debts being completely wiped away, you enter an agreement with creditors to repay the debt over an extended time. Chapter 13 bankruptcy has advantages and disadvantages over Chapter 7 but is often the only option for individuals who don’t meet the eligibility of the Chapter 7 means test.
Chapter 13 bankruptcy also begins by filing the appropriate paperwork, which can be time-consuming if you need to gather documents and information from different sources. The more you have everything prepared before beginning filing Chapter 13, the easier this part of the process will be for you. Your bankruptcy attorney can also offer guidance and help in this stage.
Chapter 13 isn’t a quick dismissal of debt. The repayment plan that you enter with the court will be for a period of 3-5 years, depending on your debt and income. This is considerably longer than the few months with Chapter 7, but this type of bankruptcy is an excellent tool to get creditors to enter into a feasible repayment plan.
The timelines above represent scenarios when everything goes smoothly and as planned. In the legal arena, as well as elsewhere in life, this isn’t always the case. Delays can occur, but you can help minimize them by being aware of the most common ones and preparing for them ahead of time.
Failure to Provide Necessary Info: Any lapse in the required info is going to delay your bankruptcy case. If you appear at your 341 meeting without the required documentation, your meeting will automatically be rescheduled, which can extend your case by a month or more.
A trustee may also request more information, which will keep the 341 meeting open until you supply any and all requested documentation. This type of delay may extend your case by about a month.
Property Issues: Owning property that is to be sold by the trustee as part of your bankruptcy discharge will usually delay the bankruptcy proceedings. The length of the delay is difficult to predict because it ranges depending on the type of asset. For example, trying to sell a vacation home in a recession could add a lengthy delay to your case.
Disputes: While not common, there is the chance that a creditor will dispute the discharge of debt. A creditor may dispute discharging the debt in part or in its entirety. In this case, your bankruptcy case will not be discharged until the issue is resolved. The resulting legal proceedings can postpone your bankruptcy discharge by an average of 6 months.
Student Loan Debt: Student loans are only dischargeable under bankruptcy in extreme cases of financial hardship. If you’re looking at options of having your student loans discharged, you should know that it involves a separate process and that you’ll need to settle on an agreement with the lender of your student loans before discharge. Due to the complexity of this process, it can take six months to a year to resolve.
How long does it take to file bankruptcy? The answer varies depending on the type of bankruptcy you file and your individual circumstances. Financial relief is possible, and you do have options. Our experienced bankruptcy attorneys can answer all your questions and guide you through the process as quickly as possible.