People in a variety of different situations might eventually file for bankruptcy. Small business owners and self-employed professionals are among those who might experience a sudden and short-term drop in income that might make bankruptcy reasonably necessary.
Bankruptcy can help people move on from short-term professional and financial setbacks that might otherwise prove impossible to overcome. A Chapter 7 bankruptcy is the fastest path to a discharge of someone’s unsecured debts, and can potentially protect the filer from life-altering debt collection efforts.
How long does the process usually take?
Bankruptcy involves multiple important dates
The personal or business bankruptcy filing needs to know that bankruptcy is not an instantaneous process. Someone struggling with debt does not simply file paperwork with the courts and eliminate their financial obligations. Each type of bankruptcy requires a different process. Chapter 13 bankruptcy usually takes over three years to complete, if not much longer. Chapter 7 filers can secure a discharge in a fraction of the time it takes to complete a Chapter 13 repayment plan.
As soon as someone files, they have protection against lawsuits and other collection efforts. The courts grant file an automatic stay that protects those awaiting a creditor meeting. Often, creditor meetings in Chapter 7 cases are formalities, as asset liquidation is uncommon. In rare cases where the party filing has property that they cannot exempt, it may be necessary to liquidate or sell off certain resources to repay creditors if possible.
There are educational requirements for the party filing as well, although online courses may only require a minimal time investment. Overall, many people can expect the Chapter 7 bankruptcy process to take roughly 3-to-6 months. Some cases may proceed through the courts more quickly than that. Others may take a bit longer if they are more complex or the courts have a particularly high volume of filings.
While it be quite difficult for someone to wait months to finally resolve debt issues, the automatic stay available in a bankruptcy filing takes effect immediately after someone submits their paperwork to the courts. They don’t need to wait six months to end creditor calls or protect themselves from a debt-related lawsuit. As such, knowing what the process involves can help someone better comprehend the benefits derived from a Chapter 7 bankruptcy.