How Long Does the Bankruptcy Process Take?

Interviewer: Yes, that’s amazing. How long does the process take, in a Chapter 7 versus a 13? How long can people expect the total process to take?

Filing a Chapter 7 Bankruptcy Is Done Expeditiously

Court: A Chapter 7, we can file it pretty fast. I might have an initial consultation with somebody, and they decide to hire me. I’ll have them bring back the documents that I need and fill out their petition.

We can have it filled out and filed within a week. Then a month after you file, you will have a first meeting with creditors, as it’s called, and it’s just a short meeting with the trustee.

Your Creditors Are Allotted Three Months in Which to Object to the Bankruptcy Petition

It’s not too very time consuming; it only takes about 15 minutes. That happens a month after you file. Then there’s a period of time that you have to wait – three months after the first meeting with creditors is the time required by law to give your creditors a chance to object to your bankruptcy if they see fit.

The Creditor Objection Rarely Occurs in Consumer Bankruptcy

It’s very rare for anyone to object, unless you have large assets or a business or something like that. All in all, start to finish, it takes about four months, and then after that you’ll be done. In practicality, you’re pretty much done as soon as I file.

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The only meetings you attend are the short meeting with creditors and then you have to do a second credit counseling class that takes about an hour. You can do all those in about a month and be pretty much done with it.

A Chapter 13 Filing Involves the Same Steps but Can Take Several Years to Complete

With a Chapter 13, you’re going to go through the same process. You’re going to have the first meeting with creditors, but then you’re going to begin your payment plan, so the whole process could be three or five years, depending on your situation.

Then at the end of it, you typically have to go to a confirmation hearing, which you don’t have to do if you’re doing a Chapter 7. A Chapter 13 filing is a little bit more involved and obviously takes longer.

In a Chapter 13 Filing, What Else Is Required in Addition to Maintaining a Payment Plan?

Interviewer: For the Chapter 13, is there much required from the person who filed or they just have to maintain their payment plan?

Court: As long as you are good about staying on top of it, you can make your monthly payments and you won’t have any trouble. At the end, you’ll go to the confirmation hearing, and it’s not a really big deal. Then you’ll get a discharge.

You Must Allot Enough of Your Monthly Income to Cover Your Chapter 13 Payment Plan

In practicality, the truth of it is Chapter 13s are very difficult to keep up with, because you’re going to have a significant portion of the money you make every month going to the trustee to pay off your creditors.

If You Are Having Financial Difficulty, Your Payment Plan May Be Modified

If anything happens during that time period that changes your financial circumstances, then you have to go through a process to get that payment modified. If you don’t do that, and you don’t make your payments, then your case can get dismissed.

In theory it works out really simple. In practicality, it can sometimes be really complicated to go all the way through that Chapter 13 period, because inevitably your financial situation is going to change at some point and you’re going to need to go through the process of modifying it.

You might have to do that two or three times. It definitely is much more involved than a Chapter 7, and that’s why the fees are so much higher as well.

By Court Koehler

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