The length of a time a bankruptcy filing will last varies based on the Chapter that is filed and the complexity of the case.
In a Chapter 13 case, the debtor pays back a percentage of his debts over a period of time that generally lasts from three to five years, depending on how much money the debtor makes and how much debt the debtor has. The bankruptcy forms include a Means Test that helps the debtor and his attorney determine what percentage of the debts can be repaid. Some debts must be repaid in full.
In a Chapter 7 case, the length of the case is usually more predictable. About 35 days after the case is filed, there is a Meeting of Creditors where the Trustee, the debtor, the debtor’s attorney and creditors can appear. The Trustee will ask the debtor questions designed to convince the Trustee that the filing is not abusive or should not be dismissed for some reason. The creditors rarely appear at this meeting, but if they do, they are also allowed to ask questions of the debtor. Such questions would usually be geared toward the circumstances existing when the credit was obtained, and how the money was used. The creditor might be trying to assess whether they have a legitimate basis on which to contest the discharge of their debt.
After the meeting, a 60-day period must expire before the discharge can be entered. The 60-day period gives the creditors or Trustee an opportunity to challenge the discharge or try to dismiss the case. In a properly filed case, such actions are unusual. After the deadline passes, the clerk can issue the discharge, but due to the high volume of cases, it sometimes takes another 30 to 45 days before the discharge is entered. The entire process generally takes about four to five months.
The good news for debtors is that the Automatic Stay protection, which prohibits creditor calls, letter, lawsuits and any other collection activity, is in effect from the moment the case is filed until the case is closed unless it is removed by motion earlier.
It is important to consult with an attorney prior to filing bankruptcy to determine the best time to file to maximize the use of the Automatic Stay.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.