What Is the Length of Chapter 7 Bankruptcy?

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A Chapter 7 bankruptcy can wipe out most of your debts in a matter of months. In Chapter 7 a court trustee will sell off your assets to pay your creditors, though state laws protect some assets from sale. Your remaining debts will be discharged. Some debts, however, such as child support and back tax debt, can't be discharged. The total process usually takes four to six months.

First Steps

  • To file Chapter 7, download the appropriate forms and instructions from the U.S. Courts website. File them, along with a complete account of your income, assets, debts and expenses, with the bankruptcy court for your district. The trustee will notify your creditors and schedule a meeting with them within 20 to 40 days of filing. Not later than 10 days after the meeting, the trustee will report whether you meet the financial qualifications for Chapter 7.

Discharge

  • According to the U.S. Courts website, filing bankruptcy creates a bankruptcy "estate" with the trustee as manager of your assets. The trustee will sell any assets state law doesn't protect and pay off your creditors, settling as many of your debts as possible. Once your available assets have been sold, the court will discharge any debts except those that survive bankruptcy. In most cases you'll receive the discharge within 60 to 90 days of the creditors' meeting.

Automatic Stay

  • As soon as you file Chapter 7, it triggers an automatic stay: Until you complete the bankruptcy process, the law bans any attempts to collect. Your mortgage lender can't foreclose, and other creditors are banned from garnishing your wages or even sending letters or calling you while the stay is in effect. This protection vanishes once you receive your discharge, and any remaining creditors can resume their collection efforts. This includes your mortgage lender: Chapter 7 wipes out the mortgage, but not the lien, or claim, your lender filed on your house, so he can still foreclose.

Complications

  • Your Chapter 7 filing may not proceed smoothly. If, for example, you abuse the process by filing the day before the foreclosure sale with no way to pay off the mortgage and a creditor presents this to the court, the court might waive the automatic stay. The court might end the bankruptcy process early if it discovers you've concealed material facts about your finances, perjured yourself or disobeyed a court order. In that case you might end up with all your debts still in place and no automatic stay to protect you.

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