Chapter 7 bankruptcy can be helpful for both people and businesses during times of financial hardship. Organizations preparing for dissolution often undergo Chapter 7 bankruptcy to eliminate financial debts beforehand. Individuals who can pass the means test may also decide that Chapter 7 bankruptcy is the best way to handle their growing personal debts.
Bankruptcy is often an emergency action undertaken by those who face aggressive collection efforts. Lawsuits, foreclosure and vehicle repossession are all common reasons that people decide to file for Chapter 7 bankruptcy. How long does it take for the filer to obtain financial relief after they submit paperwork to the courts?
Some relief begins the same day
Bankruptcy can be a complex and lengthy process, and the people who file often need help right away. Thankfully, the automatic stay that the courts provide takes effect the same day that the filer submits their documents to the courts.
All pending collection activity has to cease temporarily. The automatic stay typically remains in effect until the filer completes the bankruptcy process or the courts dismiss their filing.
Occasionally, creditors can take legal action asking the courts to lift the automatic stay, but such scenarios are relatively rare. Those who file for Chapter 7 bankruptcy typically have immediate protection from lawsuits and other attempts to collect on eligible debts.
Discharge can take several months
The goal of bankruptcy in most cases is to discharge eligible debts. When the courts grant a discharge, they eliminate the possibility of future collection activity related to those specific debts. Discharged debts can no longer lead to collection calls or lawsuits.
Typically, a Chapter 7 bankruptcy requires several months to complete, and the discharge occurs at the very end of the process. Filers can count on receiving same-day relief from creditor actions and may be able to eliminate some of their financial obligations in as little as a few months after filing their paperwork.
Learning more about the procedures and rules for Chapter 7 bankruptcy can help those struggling with debt take control of their finances. Filers may get protection from collection efforts and lawsuits, as well as long-term protection if they successfully complete the process.