When that tough decision is actually reached, I have found that people want the entire process done as soon as possible. Bankruptcy is not a vacation so the time spent at the bankruptcy estate is not necessarily enjoyable.
It is a means to an end. It is usually the shortest path to a fresh financial start.
So how long is that path?
From the Date of Filing
One of the most common bankruptcy related questions is simply, “how long does it take?” My response will certainly depend on my knowledge of that person’s situation, but there are some general guidelines.
Your typical chapter 7 bankruptcy case in the Eastern District of New York will take approximately 90 days from the date of filing to the date the case is closed and your debts are discharged.
Once the case is filed with the court, a court hearing known as the “Meeting of Creditors” is scheduled approximately one month later. If the trustee “closes” the case at the Meeting of Creditors, your case will most likely be closed and your debts discharged after 60 days.
Thus, total time from filing to closure is approximately 90 days.
Sometimes, the trustee will request additional information to supplement what has already been provided. This is usually because the trustee has further questions that could not be answered at the hearing and would like to conduct a more thorough examination.
Even with these additional document requests, the total time from case filing to case closure should be less than 6 months.
Hitches, Hold-ups and Assets
Most hitches and hold-ups occur pre-filing. With the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the entire bankruptcy process became more difficult for debtors and attorneys.
Clients have certain responsibilities in bankruptcy and it is important that you provide your attorney with all required documentation and disclose all information soon after retainer as to not hold up your case filing.
I can’t tell you how many times I have had to delay a case filing while I wait to receive a pre-filing credit counseling certificate.
Failure to submit tax returns, bank statements, pay statements and/or valuations of property could also delay your bankruptcy filing.
Post-filing, discovery of assets could drag your case out pending the administration of those assets. If you file bankruptcy and have non-exempt assets, those assets have to be sold and the proceeds used to pay back creditors.
If this happens, or if you choose to “settle” with the bankruptcy trustee, your bankruptcy case will remain open until those assets (or settlement monies) are fully administered.
While the timeline of a chapter 7 bankruptcy has a certain level of uncertainty, an experienced bankruptcy lawyer can certainly help you navigate the shortest path.
Image courtesy of kojotomoto (Flickr).