The length of time it takes to complete a bankruptcy case varies based on the Chapter and the complexity of the case.
In Chapter 13 cases, where the debtor generally has sufficient income to propose a Chapter 13 plan to pay back some or all of his debts, the length of the case is usually three to five years. The exact length is based on the debtor’s income, the type of debt, and the amount of debt.
In most Chapter 7 cases, the timeline is more predictable. After the case is filed, the court assigns a Trustee and sets a meeting of creditors. The Trustee and the debtor must appear at the meeting. Creditors do not usually appear. At the meeting, the Trustee will ask the debtor questions designed to determine whether there are any assets the debtor has or had that could be recovered and liquidated to pay creditors. In the large majority of Chapter 7 cases, there are no unprotected assets, and the Trustee does no liquidation. The Trustee can also try to confirm that the debtor qualifies for Chapter 7, or whether there has been fraudulent activity that would justify avoiding the discharge. While creditors rarely appear at the meetings, they are allowed to show up and ask a few questions of their own, especially if they believe the debtor is hiding assets or has disposed of assets in an effort to hinder creditors.
After the meeting, the bankruptcy code allows for a 60-day period in which creditors can file Complaints. Such complaints are rare, especially in cases where the debtor and their attorney have fully discussed all the issues prior to filing.
When the 60-day period expires, if there are no Complaints, the court clerk can then issue the Discharge, which removes most or all of the debts listed by the debtor in the bankruptcy schedules. Due to the high volume of cases, it often takes the clerk about 20-30 days to enter the discharge. Thus, the entire Chapter 7 bankruptcy case takes about four months from start to finish.
During the case, the debtor is protected by the Automatic Stay, set forth in the bankruptcy code to keep creditors from taking actions against a debtor while the bankruptcy is pending.
It is important to consult with an attorney prior to filing a bankruptcy case to make sure the case is filed at a time when the debtor can maximize the benefit of the Automatic Stay.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com