How Long Does Chapter 7 Bankruptcy Take?
As bankruptcy attorneys, we know that contemplating bankruptcy usually involves a lot of stress and many people who consider filing bankruptcy just want to know how long it will take for it to be over. Many of our clients are curious about how long the bankruptcy process might take for a filing under Chapter 7 of the bankruptcy code. Our first answer, perhaps unsparingly for a law firm, is it depends. A lot of it depends on the complexity or individual facts of the case and each individual proceeding may have a different timeline due to a variety of reasons. Another major factor can also depend a lot on the client’s promptness in following up with all the requirements and the client’s general ability to provide all of the financial and personal information.
If you add all of these deadlines and milestones up and assume everything is completed in the fastest possible way, someone could conceivable complete a bankruptcy in approximately 80-90 days. While it’s possible that you could receive a discharge within as few as 80-90 days after filing your case, it would be out of the ordinary in our experience. The court usually needs an additional twenty days to accommodate scheduling and other procedural requirements. Peculiar aspects of your individual case could delay certain parts of the process. Just so that you’ll know generally what to expect, the Chapter 7 discharge timeline below covers all aspects of a typical bankruptcy filing, from the initial gathering of documents up until receiving the discharge, and should help clarify how long it will take to get a Chapter 7 discharge
Before Filing for Bankruptcy
Within 180 Days before you Filing for bankruptcy, you must:
- Complete a Credit Counseling Course;
- Organize Personal Records;
- Complete Intake with Attorney (Bring financial records of assets, creditors, personal information).
Before you file for bankruptcy, you must complete a credit counseling course from an approved credit counseling agency. These courses generally last 60 to 90 minutes, and may be completed in person, on the internet, or over the phone. For a list of approved credit counseling agencies, click here. Upon completion of the course, you will receive a Certificate of Credit Counseling. This is a very important document and you make sure you take care of the original certificate because it will be required as part of your bankruptcy filing. You may complete the credit counseling course any time within 180 days before you file for bankruptcy.
You’ll start by locating financial information, such as bills; banking, retirement, and investment account statements; paycheck stubs; and tax returns. You’ll disclose all aspects of your finances on official bankruptcy forms. Once completed, the average bankruptcy petition, including schedules and other required documents, will be between 35 and 50 pages.If you’re an individual bankruptcy debtor, you’ll also need to take a credit counseling course from an approved provider. Business entities are exempt from this requirement. Most courses can be completed online within a few hours.
Filing the Petition
Once you’ve completed the required counseling course and have prepared your financial documentation, you need to complete the initial bankruptcy petition and ensure it is filed within 180 days of you completing the course. We strongly recommend you have this done by a bankruptcy attorney. Your attorney should complete the filing, file the petition with the court & pay the filing fees. Once this is completed, your bankruptcy case has been initiated. The filing of the petition serves as your request to open the case. After completing the forms and counseling requirement, the bankruptcy paperwork and counseling certificate gets filed with the clerk of the bankruptcy court along with the filing fee, request to pay in installment payments, or fee waiver. The filing not only starts the case but, if this is the first time you’ve filed, the automatic stay order that stops most creditors from collecting against you will go into effect immediately. If you’ve filed multiple bankruptcy cases in quick succession, the stay might last only 30 days, or might not go into effect at all.
Supplement Petition Within the First Two Weeks
Within 14 days of filing your petition, you must File a Certificate of Credit Counseling with the original completion certificate you received from the initial course. When we file bankruptcy petitions on behalf of our clients, We will almost always file the certificate of credit counseling with the bankruptcy petition package on Day 1 but the absolute deadline to file the certificate is 14 days after filing your petition. This also goes for File Lists, Schedules, Statements and other required documents. There are a number of court documents included in your bankruptcy petition package, including the Schedules of Assets and Liabilities, Schedule of Income and Expenditures, and Statement of Financial Affairs. We similarly file these with our clients bankruptcy petition but the hard deadline is 14 days after the petition.
Meeting of Creditors - also called the 341(a) Meeting
Within a few days, the court will send a Notice of Chapter 7 Bankruptcy Case to you and your creditors. It will include the bankruptcy case number and explain whether the case is an asset case (money will be available for creditors) or a no-asset case. The notice will also provide the date, time, and location of the 341 meeting of creditors (the hearing all bankruptcy filers must attend) and creditor filing and objection deadlines (more below). The 341 meeting of creditors will be set at least three weeks after your filing date, but not more than 40 days later. Because creditors won’t receive notification immediately, you or your attorney will need to make the creditor aware of the bankruptcy filing to stop a foreclosure, wage garnishment, or lawsuit
After filing the petition, the court is going to set a meeting of creditors sighing the first 40 days. Once you file your bankruptcy petition, the court will send through the mail a notice to you and any creditors. This notice will serve to inform you and your creditors of the existence of the new bankruptcy case and is going to provides information about various court deadlines. In addition to this, the notice will contain the date, time, and location of the Meeting of Creditors. It will also include the contact information of the Trustee assigned to your case.The Office of the U.S. Trustee is part of the Justice Department, responsible for protecting the integrity of the Federal bankruptcy system. After you file your Chapter 7 bankruptcy, the Office of the U.S. Trustee will appoint a Chapter 7 Trustee to oversee your case. The Chapter 7 Trustee is a private, impartial individual paid to administer your bankruptcy and liquidate any non-exempt assets in your estate The meeting of creditors is not a court hearing. It is designed to provide the Chapter 7 Trustee overseeing your bankruptcy case and your creditors who wish to attend an opportunity to ask questions regarding your financial circumstances and your property. There will not be a judge present during the Meeting of Creditors but you will be under oath as you answer questions.
You must bring to the meeting:
- a photo identification;
- your Social Security card;
- documentation supporting the schedules from your bankruptcy petition.
At the meeting, you’ll provide identification verifying your identity and will answer questions about the accuracy of your petition under oath. Creditors can appear for questioning but rarely do. In a straightforward case, the time spent before the trustee averages five to ten minutes.
No later than 7 days before the meeting of creditors you must provide your most recent federal income tax returns to the bankruptcy trustee. Remember, the Trustee’s address will be on the notice you or your attorney should have received after filing your petition. You must turn over particular documents, such as bank statements, paycheck stubs, and tax returns, to the bankruptcy trustee (the official who oversees your case) at least seven days before the initial 341 meeting of creditors date. The trustee will use the documents to verify information provided in your petition before the meeting. These documents are often referred to as 521 documents.
File Statement of Intention
In some cases, those that involve secured debt, you will need to file a statement of intention. The Statement of Intention is a document in the bankruptcy petition package that addresses any debts in which there is collateral (property) promised to your creditors in case you don’t pay the debt back. The most common examples of secured debts include car loans and mortgages. In the Statement of Intention, you’ll provide information about your plan to either surrender or retain any property securing your debts. We recommend filing this document with your petition but it is due at the latest within 30 days after filing your petition OR on or before the date first set for the Meeting of Creditors (whichever comes first).
Perform Statement of Intention
If you have secured debts, you’ll be required to file a Statement of Intention with the court as described above. 30 days after the date first set for the Meeting of Creditors, you must perform what is outlined in your Statement of Intention.
Complete Financial Management Course and file Form 423
You must complete the second course, called the debtor education course, after you file your case. You can take it as soon as you receive your bankruptcy case number. The certificate should be filed with the court no later than 60 days after the first 341 meeting of creditors date (more below). Otherwise, your case will get dismissed and you won’t receive a discharge wiping out your debt. In addition to the credit counseling course you completed before filing for bankruptcy, you are ALSO required to take a financial management course from an approved agency after you file bankruptcy but before your case will be complete. The course can be completed in person, on the internet, or over the phone. For a complete list of approved agencies where you can take the course, please click here.
Once you complete the financial management course, you will receive a Certificate of Completion. You are not required to file the Certificate of Completion itself, but you must complete Official Form 423 (“Certification About a Financial Management Course ”) and file this with the court — unless the approved agency through which you took the course has already notified the court of the your completion. You must file Official Form 423 within 60 days of the first date set for your Meeting of Creditors.
If you wish to keep certain personal property after filing for bankruptcy, you may enter into a Reaffirmation Agreement with your creditor. In a Reaffirmation Agreement, you agree to continue making payments on a particular debt (such as a car loan) in order to keep the property (such as a car). If you are represented by an attorney during the negotiation of a Reaffirmation Agreement, and your attorney signs all the appropriate sections of the agreement, it is not necessary for a judge to approve the agreement. However, if you are not represented by an attorney during the negotiation of a Reaffirmation Agreement, you must attend a court hearing called a Reaffirmation Hearing, where the judge must review and approve the Reaffirmation Agreement. The judge must decide that the agreement is in your best interest in order to approve it. You must complete any Reaffirmation Agreements within 60 days after the date first set for Meeting of Creditors.
Address Creditor Objections
Creditors can object to the court discharging its debt but must do so within 60 days of the first day set for the 341 meeting of creditors. The court will wait until this deadline passes before issuing the discharge.
Receiving the Discharge
After the completion of the above steps, the court will issue an order of discharge erasing your qualifying debt. You’ll get a copy in the mail a few days later. In most cases, the court will close your case shortly after issuing the discharge order—but not always. For instance, if the trustee is selling assets that take time to liquidate, such as real estate, you can expect your case to remain open for up to an additional year or so after receiving the discharge. Discharge takes place within about 4 months of filing, and there is typically only one court date, called a 341 Meeting of Creditors, where you will be called to testify as to your identity, and the nature/type of assets.
Chris Sawan is both a licensed attorney and a CPA which allows him to provide exceptional service to bankruptcy clients in Toledo, Ohio.
Dennis Sawan is a licensed attorney with a robust background interfacing with Courts making him a valuable asset for bankruptcy clients in Toledo, Ohio.
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