The average Chapter 7 bankruptcy case takes about four to six months to complete.
If you file for Chapter 7 bankruptcy, the length of your case will depend on where you live and the circumstances of your situation. For the most part though, you can count on a run-of-the-mill Chapter 7 bankruptcy case taking four to six months from the time you file to the time you get your discharge (the order that officially wipes out your debts).
How Does Chapter 7 Bankruptcy Work?
In Chapter 7 bankruptcy you are able to wipe out many types of debt (some types of debts won’t be wiped out, however). In return, you may have to give up certain property which is then sold in order to repay your creditors. (Chapter 7 bankruptcy is sometimes called a “liquidation” bankruptcy because the bankruptcy trustee liquidates your assets.)
Both state and federal laws allow you to keep certain types of property, up to certain dollar amounts, in Chapter 7 bankruptcy. The laws protecting your property are called “exemption” laws. If your property is exempt, you can keep it. Most Chapter 7 filers lose little or no property in bankruptcy. (Learn how exemptions work in Chapter 7 bankruptcy .)
The Chapter 7 Bankruptcy Filing Process
You start a Chapter 7 bankruptcy case by filing a packet of papers (called the bankruptcy petition and schedules) with the bankruptcy court. These papers provide details about your income, expenses, debts, property and assets, recent financial transactions, and other aspects of your finances. On your bankruptcy schedules, you also indicate which of you property is exempt under state or federal law. (Learn more about filing for Chapter 7 bankruptcy .)
You will then get a notice scheduling a hearing, called the meeting of creditors or the 341 hearing. This hearing is held between 20 and 40 days after you file. You have to attend this hearing, which is conducted by bankruptcy trustee appointed to your case. The trustee will question you under oath and may ask you to provide additional information or documents.
In most cases, you will receive your bankruptcy discharge (the court order which means your debts are wiped out) a few months after your 341 hearing. Your case is not officially closed, however, until the court issues the “final decree.” (Learn the difference between the bankruptcy discharge and final decree .) For most people, the bankruptcy discharge is what matters – and that’s when they think of their case ending.
Average Length of a Chapter 7 Case
From filing the bankruptcy petition to the bankruptcy discharge, most Chapter 7 cases take four to six months. But this varies depending on what state or county you live in. In some courts, cases might take less or more time to move through the standard process.
To find out how long bankruptcy usually takes in your jurisdiction, talk to a local bankruptcy attorney.
When Your Chapter 7 Case Might Take Longer
There are many things that could cause your Chapter 7 case to take longer than the standard case. Here are just a few:
The trustee needs more information. If you show up at the meeting of creditors and the trustee asks you to provide more information or documents, this may delay your case until you are able to provide them. Sometimes the trustee will reschedule the hearing for another date, so she can question you about those documents. Other times the trustee won’t need to hold another hearing.
You delay getting personal financial management education. Before the court will order your discharge, you must take a personal financial management course and then file the certificate of completion with the court. If you delay in getting this class, your discharge will be delayed.
A creditor challenges the dischargeability of a debt. If one, or more, of your creditors doesn’t believe its debt should be wiped out, it will file a paper with the bankruptcy court (called a complaint to determine nondischargeability ) asking the court to declare the debt nondischargeable. The court will then hold a hearing on the matter, which might involve witnesses and introducing more documents. This will add some time to your bankruptcy case.
You want to discharge a student loan. If you want to wipe out student loan debt, you must prove to the court that repaying the debt would case you undue hardship. You’ll have to file a complaint to determine dischargeability and likely to go at least one hearing. Some student loan discharge cases drag on for years. (Learn more about getting rid of student loan debt in bankruptcy .)
The trustee or a creditor disagrees that an item of property is exempt. You may end up battling over whether a particular piece of property is exempt under the law. This will add time to your case.
An experienced bankruptcy attorney will be able to alert you to issues that might make your Chapter 7 bankruptcy take longer than usual.