How Long Does Bankruptcy Take?

Sometimes, no matter what you try, you may find yourself drowning in debt and decide to file for bankruptcy. It’s something most people dread having to do, and try to avoid at all costs, but sometimes bankruptcy is the only choice left. Once you’ve figured out the paperwork and how to file, the next question becomes how long does bankruptcy take?

The short answer is that this depends on the type of bankruptcy you are filing for. There are a handful of different chapters of bankruptcy you can file. For individuals, there generally are two types of bankruptcies that you have a choice between: chapter 7 and chapter 13.

Chapter 7

Chapter 7 bankruptcy is a type of bankruptcy where most debts are erased and put into nonpayment. This doesn’t include all debts, but it will wipe out most of them. In return, the debtor usually has to give up some of their property and belongings. This property is usually sold off in order to pay off the debts.

Chapter 7 bankruptcy usually takes between three and four months to complete. In our most recent cases the average has been 98 days from the date of filing until the discharge is entered by the court. The first thing that has to be done is filing all of the paperwork, including showing income, declaring all of your property, showing what your debts are, and your expenses. After this is in, then anywhere from twenty to forty days later, you will be given a hearing called the meeting of the creditors, also known as the 341 hearing. A few months after this hearing is when the process wraps up, discharging your debts if they find you qualify.

Qualifying for Chapter 7 can be difficult though. While you can still make a significant amount of income for a Chapter 7, you have to have significant expenses. The higher your income, the more likely you won’t qualify for Chapter 7 bankruptcy.

Chapter 13

For those who don’t qualify, there is the option of filing for Chapter 13 bankruptcy. This is a type of bankruptcy where the debtor makes plans to pay at least part of the debt. Unlike the Chapter 7, Chapter 13 will still make the debtor pay a fair portion of the debts, but it will be able to discharge some, as well as helping make payment plans for the rest. These payment plans usually figure out how debtors can make installments over a three to five year period in order to clear up the debts. Because of these payment plans, Chapter 13 takes a much longer time to finish than a Chapter 7 does. You aren’t done with a Chapter 13 until you have finished the pay period, which is decided based on your income level. It’s important to note that any missed payment could result in a Chapter 13 being dismissed if the debtor doesn’t contact the person in charge of their case.

The upside of a Chapter 13 bankruptcy is that, unlike Chapter 7, the debtor won’t have to give up property like cars and homes in order to pay off the debt. While Chapter 13 takes a lot longer to complete, it’s a good option for those who don’t want to lose significant property in the bankruptcy process.

These are things to consider when choosing the type of bankruptcy to file. You can choose a shorter time and lose property, or years to complete and keeping your home and car. Only you can know what type is right for you.

Talking to an attorney at Van Horn Law Group will ensure you make the best decision for your financial freedom.