The Timeline on a Chapter 7 Bankruptcy

My Pittsburgh bankruptcy clients are often very interested in knowing the normal timeline in a Chapter 7 bankruptcy, and understandably so. The process often determines when they can go on with life as normal.

The timeline begins when the bankruptcy is filed. However, the bankruptcy cannot be filed until several important steps are completed.

First, the petition must be completed and electronically filed. As your attorney, I will need to list all of your assets and liabilities, complete all of the schedules and the means test, submit your income and expenses, and disclose other bankruptcy relevant material. I will also need the information required by the court and the trustees, including paystubs, tax returns, proof of retirement and insurance accounts, and all income and asset information about a debtor-owned business.

Once all of this information is provided, I will also need time to organize it and include it in your bankruptcy petition. The faster you provide it, the faster the timeline starts.

Second, the debtor will need to complete an approved credit counseling course. This can be ordered at my office, and completed over the phone or the internet. It normally takes between 1 to 2 hours to complete. The bankruptcy petition cannot be filed until 24 hours after the course is completed.

Third, I will need to be paid in full before I can file. I will be happy to set up a payment plan, and very often do so for clients. However, if I am not paid in full, my legal fees could be discharged in the bankruptcy (not a business model that works very well to keep me in business!). But, payment plans often work out fine for clients. I time the last payment to coincide with completing the bankruptcy petition, so I am able to file as soon as possible.

Once the bankruptcy is actually filed, you will receive a case number, and roughly 6-to-8 weeks later, you will be notified by the court of a Meeting of Creditors date (the details of which are discussed elsewhere on this blog in greater detail). This will be the only official appearance you will be required to make. This appearance is mandatory, but it is not something that should cause stress or consternation. 

You will also be required to complete a second course online or over the phone. This is known as a financial management course. Once again, it is easy to do, and it takes 1 to 2 hours. You have until 60 days after the first scheduled meeting of creditors to complete the course, and it can be completed any time after your case is filed. (NOTE: if you don't complete it on time, your case will be dismissed... so get it done!)

After the meeting of creditors is completed, your case will remain open for 60 days, giving your creditors or the United States Trustee the opportunity to object to the discharge. This occurs very rarely. However, during this time, your Chapter 7 bankruptcy technically remains open. You should not use any credit during this time, take out any loans, or transfer any property. Your attorney will advise you in great detail as to what you should and shouldn't do during this time.

When the 60 day period ends, your Chapter 7 bankruptcy will officially be discharged. The bankruptcy Court will mail you a notice of discharge, which you should keep for your records. At this point, you can take any financial action that you like. The Chapter 7 bankruptcy timeline comes to a close.

In summary, once your Chapter 7 bankruptcy is prepared and filed it will normally be about 3 1/2 months before your case is officially discharged, but as little as 6 weeks until everything you are required to do is completed. Contact us today to set up a free consultation and see if you qualify for a Chapter 7 bankruptcy.