Palm Springs Law Blog

Wednesday, January 25, 2023

How Long Does the Process of Filing Chapter 7 Bankruptcy Take?

When debts pile up, many people pursue bankruptcy to resolve their financial struggles.

Depending on your situation, you can seek several categories of bankruptcies in federal court. For many California residents who lack substantial income or high-value assets, Chapter 7 is a quick and streamlined bankruptcy option that can help wipe debt from credit cards, loans, medical bills, and even past-due rent.

Not everyone will qualify for a Chapter 7 bankruptcy, but if you do, you should know what to expect during the process and how long you’ll need to wait for a typical case to resolve.

Chapter 7 Explained

Chapter 7 bankruptcies work by eliminating debts without a complex repayment plan. However, only certain individuals who pass a “means test” qualify for federal relief under Chapter 7.

If you’ve successfully passed the means test, you’ll most likely proceed with an official filing and commence the process of absolving your debts. As with all bankruptcies, every case comes with a unique set of circumstances that can affect the timeline and outcome of the situation.

Typically, Chapter 7 cases will take four to six months to resolve. However, many factors can cause delays in a bankruptcy case. Some of these factors include:

  • Missing financial information
  • Student loan relief
  • Motion hearings
  • Continuances
  • Suspicions of fraud
  • Creditor delays
  • Pending property sales

An experienced bankruptcy attorney can help determine the best course of action in your case to help prevent lengthy delays.

Timeline for a Chapter 7 Bankruptcy

Chapter 7 involves a series of predetermined legal steps and procedures before any judgment on a discharge of debts can be reached.

Filing Initial Paperwork

The first step in any bankruptcy is to file the appropriate documents with the court. Chapter 7 bankruptcies require in-depth financial disclosure and detailed information regarding many elements, such as:

  • Debits and credits
  • Assets
  • Taxes
  • Personal income
  • Property exemptions
  • Financial transactions

After you submit your initial paperwork, the courts will review your filings and proceed with setting a hearing.

341 Hearing

When you file for bankruptcy, the courts will first notify all your creditors to pause collection activities against you.

Generally, courts will set a 431 hearing date 20-40 days after filing. At the hearing, you’ll answer general questions under oath. Additionally, creditors may attend, ask relevant questions in front of the court, and voice their concerns.

Post-Hearing Matters

In some cases, the courts may request additional information from you, which could delay the process. Creditors have 30 calendar days to file any objections following the bankruptcy hearing.

If you’re seeking to wipe out student loans as part of your bankruptcy, you’ll also need to file an additional lawsuit known as an “adversary proceeding.” These lawsuits can cause significant delays and must be resolved before a judge can dismiss your Chapter 7 bankruptcy case.

Financial Management Course

Everyone who files for Chapter 7 must complete a mandatory, court-ordered “debtor education” course within 60 days after their hearing.

Failure to complete the course can result in severe consequences, including expensive filing fees to reopen your case.

Discharge of Debts

Once all pending matters have been resolved, including motions, complaints, and objections, the courts will take roughly two months to issue an official discharge of your debts.

However, a bankruptcy case will remain legally open until the courts issue their “final decree.”

Working with Palm Springs, CA, Bankruptcy Lawyers

If you’re considering filing for bankruptcy, Heritage Legal, PC can help.

Our team of seasoned bankruptcy lawyers represents clients throughout Palm Springs, CA. Contact our office today to schedule a free, no-obligation consultation.

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