How Long is the Bankruptcy Process?
One of the most common questions surrounding bankruptcy is how long is the process? And the frustrating answer is, “well, it depends”. Typically, an individual or business that is considering bankruptcy should first contact an experienced attorney to arrange a time to conduct a free consultation. If you would like one of the experienced attorneys at Arnold & Smith, PLLC to help you understand your options, please contact us here. An experienced attorney will provide you the information to decide whether bankruptcy provides a good opportunity or whether alternatives to bankruptcy could exist.
After your initial free consultation, the timeline for bankruptcy begins. For some, making the decision may take the most time whereas others may understand immediately that bankruptcy is their best option. Regardless, once the decision is made to move forward with a bankruptcy, you will have been provided certain homework to be completed and documents to assemble that will help the attorney prepare the filing documents. Please do not underestimate the amount of information needed to fully prepare to file a bankruptcy. The time it takes to prepare that information depends solely on the debtor. Some are able to fill out information and assemble the documents in a matter of one weekend, whereas others may need weeks if not months to do so. But once that process is complete, the debtor should drop off that information to the attorney for the preparation of the filing documents. Preparing the documents for the debtor’s signature should only take a week, but it depends mostly on the adequacy and completeness of the debtor’s homework. Once the debtor signs the prepared filing documents, then the bankruptcy case is filed that very day and the process begins:
Chapter 7. A typical chapter 7 will last no more than five months or so. A “typical” chapter 7 is a bankruptcy wherein the debtor has a lot of debt and not much property. The estimate of five months, however, is misleading: after the bankruptcy case is filed, a mandatory meeting is held approximately 30 days after the filing date. The debtor is required to attend, however, that is often the debtor’s only required court appearance. For many debtors, that mandatory meeting is the last required effort to be made in the bankruptcy case and therefore, the remaining few months are simply administrative. Notwithstanding, chapter 7’s can last many months and even years if the case is complicated or the debtor has committed fraud. In those instances, the bankruptcy court must spend the time needed to adequately investigate the debtor and his or her assets in order to liquidate.
Chapter 13. A typical chapter 13 will last between three and five years. The long time span for chapter 13 is beneficial to the debtor since often a debtor will file a chapter 13 to structure a payment plan wherein the longer the debtor has to make those payments, the more affordable it will be. For instance, if a debtor is behind on their mortgage by six months, the debtor will be afforded the opportunity to pay off those missed mortgage payments over the entire lifespan of the bankruptcy, up to five years. If the debtor was required to make those same payments over a shorter lifespan, the “per month” amount could be too expensive and the debtor would be in danger of losing their home.
Chapter 11. A typical chapter 11 will last approximately one year, but the more complicated business Chapter 11’s may last several years. In 2005, the new bankruptcy code created a “small business bankruptcy” which required businesses that filed bankruptcy with approximately $2 million worth of debts to be in and out of bankruptcy within one calendar year. While this may seems hurried, the lesser burden on the small business debtor allow it to achieve bankruptcy relief in a quicker and less expensive manner, since a prolonged Chapter 11 would require significant attorney fees and bankruptcy court quarterly fees.
Whatever chapter of bankruptcy suits you best, an experienced attorney can help guide you through the process until the end. Most debtors want their bankruptcies over as soon as possible and we strive to accomplish that with every client and if you would like to set up a free consultation to discuss your bankruptcy options, please contact us.