How Long Does Chapter 7 Bankruptcy Take?

pulling together documentation for a Chapter 7 bankruptcy petition.If you’re looking forward to getting some debt relief and making a fresh start financially, you may be wondering how long your bankruptcy will take. There are several factors that can add to the complexity of the bankruptcy timeline, but there also may be some steps you can take to help move the process along. Let’s take a look.

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What Exactly Is Chapter 7 Bankruptcy?

Maryland residents who are struggling with personal debt and meet the “means test”, may file for Chapter 7 bankruptcy in Maryland. Individuals are not eligible if their annual income exceeds the state median. In most cases of Chapter 7 bankruptcy, the courts will “discharge” or forgive the allowable debts as part of the bankruptcy petition. Although not all debts will get wiped away, items such as credit card debts, personal loans and medical bills may be completely eliminated. Those who file for Chapter 7 remain responsible for certain financial obligations such as unpaid taxes, child or spousal support, retirement account loans, penalties from criminal activities and student loan payments.

How Long Does It Take To Start The Bankruptcy Process?

The bankruptcy process begins as soon as you have the first meeting with your bankruptcy attorney. Your attorney will begin a bankruptcy petition, which will include reviewing all required documents including your income tax returns, income, debts, assets and credit reports. It will typically take your attorney approximately 10 days to complete the bankruptcy petition portion of the filing. If you don’t have all of the required documentation available at the start of the petition, the 10 day window could stretch to a longer timeframe. In some states, such as Maryland, you will be required to complete an approved credit counseling course. The certificate of completion from this course will need to be submitted along with your bankruptcy petition.

How Long Does The Bankruptcy Court Process Take?

Once you review your bankruptcy petition, it may be submitted to the bankruptcy court. Your attorney will receive a case number and date from the court about 40 days after submission, and at that time you will be required to attend a meeting with your creditors. This meeting is referred to as a “341 meeting”. During this meeting, a trustee assigned to your case will ask questions about your petition and your debts. Once this meeting is complete, you will need to wait for the bankruptcy court to make a decision about the discharge of your debts. It can take approximately six to eight weeks to get a decision. This is partly because your creditors have 30 days from the date of the 341 meeting to object to the discharge of a debt. If the court reaches a decision to discharge your debts, they will mark the case as completed and notify you of the discharge.

What Can Make My Bankruptcy Take Longer?

Chapter 7 bankruptcy generally takes between four and six months to complete, but there are some scenarios that may make the process longer:

  • More information is needed. Your trustee may submit a request for more information than what you provided, which could delay your case.
  • The trustee is selling your property. Although the courts will determine what real estate you can retain to maintain an appropriate living situation, some of your real estate may be sold by the trustee during the bankruptcy process. The sale of real estate generally takes longer than the liquidation of any other assets and debts.
  • You postpone your credit counseling class.< Every person filing for bankruptcy is required to take a credit counseling course. Exceptions are granted to active military, as well as those or are not physically or mentally fit to take the course. If you put off completing of the course, you could delay your petition.
  • A creditor needs more time. Creditors are allowed (but not required) to come to your debt hearing meeting. Should they suspect fraud or need more time to review your debts, then the 341 meeting could be postponed thereby drawing out your case. However, this is not typical and generally only occurs in more complex bankruptcy cases.
  • If you are part of a litigation in the court. If you are part of a litigation (in a separate case) in the bankruptcy court, it’s likely that your discharge won’t be approved until the lawsuit is settled by the judge.

As with any type of court filing, being organized and providing the proper documentation can make your bankruptcy petition go more smoothly. It’s also highly advisable to work with a an experienced bankruptcy attorney. Contact Sirody & Associates for a free consultation.