The goal of any bankruptcy petition is a bankruptcy discharge, in which the legal responsibility to pay most if not all outstanding debts is eliminated. Once you file your bankruptcy petition, you will usually obtain your discharge in a timely manner unless a creditor or the United States Bankruptcy Trustee objects.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is known as a straight or liquidation bankruptcy. If you file Chapter 7, you agree to give up any assets over a certain threshold to the bankruptcy trustee, who will liquidate your possessions and distribute the proceeds to your creditors. Most debtors who file Chapter 7 bankruptcy have few or no assets and simply receive a discharge. For a Chapter 7 bankruptcy proceeding, you will have to attend a Section 341 Meeting of Creditors approximately 30 to 45 days after you file your petition. If no objections are lodged within 60 days of this meeting, you will receive your discharge shortly thereafter.
Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, you maintain possession of all of your assets but must make payments to creditors over 3 to 5 years. When you file a Chapter 13 petition, you must develop a payment plan for the court to approve. If you are over your state's median income for a household of your size, you must make payments for 5 years, otherwise you make 3 years of payments. Once your payments are complete, you will receive your discharge shortly afterward.
Section 341 Meeting of Creditors
The Section 341 Meeting of Creditors gives your creditors a chance to ask you questions face-to-face about your financial situation. In actuality, creditors rarely appear at the 341 meeting. Your bankruptcy trustee will also have the opportunity to ask you questions about the information you entered on your bankruptcy petition. If no abnormalities are uncovered at the meeting, you normally have to wait just 60 days for your discharge in a Chapter 7 proceeding.
U.S. Trustee Objections
Unlike the bankruptcy trustee who conducts your 341 meeting, the U.S. Trustee oversees the bankruptcy program as a whole and looks for evidence of fraud. If you have an excessive amount of debt, or a very high income, the U.S. Trustee may take a close look at your petition to make sure you are not abusing the bankruptcy process. If you the U.S. Trustee objects, you may have your Chapter 7 proceeding converted to a Chapter 13, or you may have your case dismissed. The U.S. Trustee can also ask for additional time to review your paperwork, in which case your discharge may be held up indefinitely.
For a Chapter 7 case, a discharge is usually issued between three and four months after you file a petition. For courts that are overwhelmed with bankruptcy filings, such as in major cities, you may not receive your discharge for a longer time period. However, once 60 days have passed without objection since your 341 meeting, your case is effectively over, and you are entitled to your discharge. For Chapter 13 cases, you will not receive your discharge until after you have complete all payments and the court verifies that your payment plan is complete.