For most filers, a Chapter 7 case will end when you receive your discharge—the order that forgives qualified debt—about four to six months after filing the bankruptcy paperwork. Although most cases close after that, your case might remain open longer if you have property that you can’t protect (nonexempt assets). During that time, you must cooperate with the trustee appointed to administer your case. Your case will close after the trustee sells the assets, pays out the funds, and files a report with the court.
When you file a bankruptcy case, you’ll have to complete certain requirements before you can qualify to have your debts discharged (wiped out). At a minimum, you’re required to:
You’ll also have to wait 60 days after your meeting of creditors before the court will issue your discharge order. If all of your property is exempt—meaning that you’re allowed to keep it—the court will not have to take any further action in your case and will most likely close it.
If you have assets that are not exempt, you’re required to turn those over to the trustee assigned to your case. The trustee’s job is to gather the nonexempt assets, sell them, and distribute the proceeds to your creditors who filed valid proof of claims. If your case is complicated, it can take the trustee months or, in rare cases, even years to track down the property and liquidate it.
The trustee may need your help in gathering the property. You have a duty that continues throughout the case to cooperate with the trustee and the court or you risk the court revoking your discharge. Failing to cooperate means that you'll likely experience the worst possible outcome: to lose your nonexempt property and lose almost any benefit that you would gain from the bankruptcy discharge.
Two kinds of litigation can delay the closing of your bankruptcy case.
Find out more by reading What Is Bankruptcy Litigation?
Once all assets have been liquidated and claims paid, the trustee will file a Final Report with the court. Unless any party objects to the final report, the court will issue a final decree, and the clerk of the court will close the case.
Even the judge issuing a final decree in the case won’t necessarily spell the end. Sometimes it’s necessary to reopen the case. Most often this happens when the trustee, one of the creditors, or the debtor becomes aware of an asset that should have been included when the case was active. Your duty to cooperate with the trustee will continue if the case is reopened, but the court will not have the power to revoke your discharge more than a year after the case was closed.