Nobody is particularly thrilled with the idea of filing for bankruptcy, and those who do so are understandably eager to get through the legal process and to the good part, bankruptcy discharge: the moment when you’re legally released from many types of unsecured debt and are free to start rebuilding. Many Chapter 7 bankruptcy cases are completed within 4 to 5 months. This timeline generally holds true in all three states where we handle consumer bankruptcy cases: Alabama, Mississippi and Tennessee. But, the timeline may differ from case to case.
Factors Impacting the Chapter 7 Timeline
How quickly you can get through a bankruptcy case and receive a discharge depends on several factors, including:
- Whether you are eligible and able to file right away. Some reasons you may not want to or may not be able to file for Chapter 7 bankruptcy immediately include:
- Having had a bankruptcy case dismissed within the past 180 days
- Having received a discharge in a Chapter 7 case filed less than eight years ago
- Having recently spent money on luxury goods or activities, taken out new credit, or given away property
During your initial consultation, your bankruptcy attorney will ask you questions to determine whether there are any obstacles to filing immediately, and explain any benefits or drawbacks to acting quickly.
The completeness and accuracy of your bankruptcy petition and schedules. Incomplete or inaccurate documents in your bankruptcy filing can cause delays in a number of ways, including requests for additional information from the bankruptcy trustee and perhaps even dismissal of your bankruptcy case. To keep your case moving forward smoothly, it is essential that you gather all relevant information and ensure that your paperwork is well prepared. Your bankruptcy attorney will prepare your petition and schedules, but your lawyer will be reliant on information you provide, and you’ll ultimately be responsible for reviewing those documents and ensuring that the information is complete and accurate before you sign them.
How quickly you respond to any requests from the trustee. You can help keep your case moving forward by promptly and completely responding to any requests for additional information or clarification that the trustee may make. The sooner you provide the necessary information, the sooner you can move on to the next stage of the proceedings.
Whether you have non-exempt property. Most people who file for Chapter 7 bankruptcy keep all of their property, which means there is no need for liquidation. However, a case involving non-exempt property will typically take longer than a no-asset case, because the bankruptcy trustee will have to assess the value of the non-exempt property, make decisions about what to sell for the benefit of creditors, and then sell those assets and distribute partial payment to creditors. As a rule of thumb, you want to be current on all vehicle / mortgage payments before filing for Chapter 7 bankruptcy.
Whether the trustee or any creditor pursues adversary proceedings. If the bankruptcy trustee or one or more creditors object to some aspect of your bankruptcy case, such as whether certain property should be exempt, managing that aspect of the case will likely add to the timeline. In some cases, these issues can be resolved by agreement, and the delay may be negligible. In others, a hearing may be scheduled, which will generally push back the subsequent steps in the process.
When you complete the required financial management course. Nearly every consumer bankruptcy petitioner is required to complete an approved financial management course (also known as “debtor education”) before receiving a bankruptcy discharge. You can take this course at any time after your bankruptcy case is filed, and there’s no reason to delay. But, if you reach the end of your case and haven’t fulfilled this requirement, you could find that you’re the only thing holding up your discharge.
It’s worth noting that most of these factors are within your control. Providing complete and accurate information to your bankruptcy attorney, carefully reviewing petitions and schedules before you sign, and responding promptly to any requests for additional information or challenges will all help keep your case moving along on schedule. Also, completing your debtor education course well in advance of completion will help avoid any last-minute delays.
Relief Starts Long Before the Bankruptcy Discharge
While receiving a discharge and making a fresh start is plenty of reason to want to move through a bankruptcy case quickly, many people are concerned about timing for specific reasons. Some common examples include: the threat of automobile repossession, a pending foreclosure action, or a wage garnishment that’s making it difficult to make ends meet.
In most consumer bankruptcy cases, the debtor is protected from those types of actions immediately upon filing. That’s because in most cases, an automatic stay is entered at the commencement of the case. The automatic stay is a court order that forbids most creditors from taking any further collection action for as long as the order is in effect. The automatic stay can even freeze legal actions already underway, such as lawsuits and foreclosure actions. In any bankruptcy, the automatic stay is your best friend. It is typically a significant reason most people end up filing.
So, even if your case is more complicated than the typical Chapter 7 case and takes longer, you’ll likely still see quick relief from collection calls, threatening letters, debts being transferred to collection agencies, threats of lawsuits and repossession, and even a pause in ongoing legal actions.
The Sooner You Educate Yourself, the Sooner You Can Move Forward
If you’re eager to take advantage of the relief Chapter 7 bankruptcy offers to start building a better financial foundation for yourself and your family, you can take the first step right now. Schedule a free consultation with one of the experienced bankruptcy attorneys at Bond & Botes, P.C. to learn more about your options and any factors that might impact the timeline in your Chapter 7 case.
We’ve been helping people in Alabama, Tennessee and Mississippi navigate the bankruptcy process for decades, and we look forward to discussing how we can help you.
Nathan Rester is an Associate Attorney at the Bond & Botes Law Offices location in Jackson, Mississippi. He holds a Bachelor of Arts from Mississippi State University, and a Juris Doctorate from the University of Mississippi School of Law. He prides himself in his work assisting his bankruptcy clients to achieve financial stability for themselves. Read his full bio here.