Filing your paperwork. Your Chapter 7 bankruptcy case begins when you file the bankruptcy paperwork with the court. The documents provide details about your income, expenses, debts, assets, recent financial transactions, and the property you're allowed to exempt.
Attending the 341 meeting of creditors hearing. After you file, the court will notify your creditors that all collection activities against you must stop. The court will set a 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. Your creditors will have the right ask questions too; however, this rarely happens. Your time with the trustee will likely take less than ten minutes.
Providing additional information. 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. The trustee will conclude the hearing after receiving all necessary information. Your creditors will have 30 days after the hearing concludes to object to either the discharge of a particular debt or your entire case.
Filing the financial management course certificate. 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.
Receiving your discharge. 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 won't be officially closed, however, until the court resolves all outstanding matters, issues the "final decree," and dismisses your case.
Why It Might Take Longer to Complete Your Chapter 7 Bankruptcy
Even though in most cases, the court grants a discharge and closes the case in less than five months, things don't always go that smoothly. How long the delay might take will depend on the type of problem involved.
Short delay. If you don't provide information when you should, but you correct the problem quickly, both your discharge and the closure of your case will be delayed briefly (no more than a month, in most cases).
Moderate to long delay. If a property issue exists, you'll likely receive your discharge promptly but your case will remain open while the property issue gets resolved. The length of the delay usually depends on the complexity of the dispute or length of time it takes the trustee to sell the property.
Long delay. If there's a question about whether you should receive a discharge, you'll likely be involved in a bankruptcy lawsuit. Both your discharge and the closure of your case could be delayed by six months to a year.
Situations That Might Make a Chapter 7 Case Longer
Here are some typical situations that could cause your Chapter 7 bankruptcy to linger on:
The trustee needs more information. If the trustee asks you to supplement your documents, your case will be delayed until you provide the requested items. The trustee will keep the 341 meeting of creditors open (as opposed to concluding it) by rescheduling the hearing. If you provide the documents before the continued hearing date and the trustee is satisfied, the trustee might cancel the new date and conclude the hearing. Otherwise, you'll have to return to court and answer additional questions about the documents. This problem will likely delay your discharge by the additional time needed for the meeting of creditors.
A creditor wants questions answered. The trustee usually allocates ten minutes to each bankruptcy filer (there will be multiple filers at your hearing). If a creditor can't examine you within that time, or if more than one creditor wants a turn, the trustee might reschedule the hearing. Continued meetings happen more often in complicated cases, or when the creditor suspects that you've committed fraud. Your case will be delayed until the meeting is concluded—possibly longer if the creditor objects to the discharge of its debt.
The trustee is selling your property. Your matter might remain open if the trustee is selling some of your property. You can expect real estate to take longer to sell than other types of assets. You'll likely receive your discharge once you complete all of the steps outlined above. The case will remain open until the trustee sells the property, distributes the funds to creditors, and submits a final report to the court.
A motion or complaint needs resolution. If you're a part of litigation in the bankruptcy court, whether you'll receive a discharge before the lawsuit is settled will depend on the type of dispute. For instance, a disagreement about your ability to exempt your stamp collection won't affect or delay your discharge. But if your creditor files a complaint to determine the nondischargeability of a debt (asks the court to find that you must pay it), or objects to your entire bankruptcy, you won't receive the discharge until the matter gets resolved. Plan on the lawsuit adding six or more months to your case.
You want to discharge a student loan. Wiping out student loan debt requires a special process, including filing a complaint alleging that repaying the debt would cause undue hardship. You'll need to either settle with the lender or prove your case at trial before receiving the discharge. Some student loan discharge cases can drag on for a year or more. (Learn more about getting rid of student loan debt in bankruptcy.)
You delay your debt education course. Before the court orders your discharge, you must take a personal financial management course and file the certificate of completion with the court. If you delay completing this class, your discharge will be postponed. If you delay too long, the court will dismiss your case without a discharge.
An experienced bankruptcy lawyer will be able to alert you to issues that might make your Chapter 7 bankruptcy longer than most.
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