The average Chapter 7 bankruptcy case will take from four to six months from the time you file to the time that you receive your discharge (the order that officially wipes out your debt). Your case will take longer, however, if any number of things happen. For instance, a request from the trustee for additional information or documents might result in a short delay. You can expect a longer delay if your case is an “asset” case (the bankruptcy trustee must sell property for the benefit of your creditors) or if you’re involved in a bankruptcy-related lawsuit. In this article, you’ll learn more about the typical Chapter 7 Bankruptcy case, as well as about events that could lengthen the process.
In Chapter 7 bankruptcy you can wipe out most of your nonpriority, unsecured debts, such as credit card balances, personal loans, and medical bills. Not all debts go away, however. You’ll remain responsible for certain obligations, including overdue child and spousal support payments, unpaid taxes, and student loans. In exchange for your discharge, you might have to give up property. But you won’t have to give up everything you own. You’ll “exempt” (keep) the property that your state believes you’ll need to maintain a home and job and surrender any nonexempt property to the bankruptcy trustee (the person in charge of overseeing your case). The trustee will “liquidate” (sell) the nonexempt property and use the proceeds to repay your creditors. Most Chapter 7 filers, however, lose little or no property in bankruptcy. (Learn how exemptions work in Chapter 7 bankruptcy.)
Your Chapter 7 bankruptcy case begins when you file the bankruptcy petition and schedules with the bankruptcy court. The documents provide details about your income, expenses, debts, assets, recent financial transactions, and the property you’re allowed to exempt. (Learn more about filing for Chapter 7 bankruptcy.)
After you file the petition, the court will notify your creditors that all collection activities against you must stop. The court will set the date for the one court appearance you’ll be required to attend, called the 341 meeting of creditors hearing, between 20 and 40 days after you file, as well. At the hearing, the bankruptcy trustee will place you under oath and ask you a series of routine questions. If any of the information in your petition is unclear, the trustee might ask you to clarify it or provide additional documents. Your creditors will have the right to attend the hearing and ask you questions about your financial situation; however, this rarely happens. Your time with the trustee will likely take less than ten minutes.
If the trustee needs additional information, or if you forget to bring identifying documents—such as your drivers’ license and social security card—to the 341 meeting of creditors, the trustee will continue the hearing to another date, and you’ll have to come back again. Once the trustee receives all necessary information, the 341 meeting will be concluded. Your creditors will have 30 days after the conclusion of the hearing to object to either the discharge of a debt or your entire case.
Once you receive the notice of your 341 meeting of creditors, you’re free to complete your financial management course—the second of the two courses you must take to receive a discharge. You must complete it within 60 days of the first date set for the 341 meeting of creditors.
Assuming that everything goes according to schedule, you can expect to receive your bankruptcy discharge (the court order that wipes out your debts) about 60 days after your 341 meeting of creditors hearing, plus a few days for mailing. Your case will not be officially closed, however, until the court resolves all outstanding matters, issues the “final decree,” and dismisses your case. (Learn the difference between the bankruptcy discharge and final decree.)
The time it takes your case to progress through bankruptcy will vary depending on your local court because some courts take more or less time to move through the process. A local bankruptcy attorney can tell you how long a case will take in your state or county.
Even though most cases are over in less than five months, it isn’t always the case. Here are a few common situations that could cause your Chapter 7 bankruptcy to take longer than expected:
An experienced bankruptcy attorney will be able to alert you to issues that might make your Chapter 7 bankruptcy take longer than usual.