How Long Before Debt is Discharged After Bankruptcy?

By Elizabeth Stock

A bankruptcy discharge is available to you at the completion of your bankruptcy case. Your debt is erased when you receive the bankruptcy discharge, and the debt is no longer enforceable. However, when you receive a bankruptcy discharge will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, the two most common forms of personal bankruptcy.

A bankruptcy discharge is available to you at the completion of your bankruptcy case. Your debt is erased when you receive the bankruptcy discharge, and the debt is no longer enforceable. However, when you receive a bankruptcy discharge will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, the two most common forms of personal bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a liquidation proceeding that involves selling your assets to raise funds to become part of the bankruptcy estate. The funds are then used to repay your creditors. In Chapter 7, a bankruptcy trustee is appointed by the court to handle the liquidation of your nonexempt assets. Certain categories of property are exempt from seizure. For example, the bankruptcy trustee is unlikely to seize your vehicle if doing so would impair your ability to work. In addition, many Chapter 7 bankruptcy cases contain no assets to liquidate. This can make the bankruptcy case proceed more quickly than if you had a lot of assets and creditors fighting over who is entitled to the proceeds from the sale of those assets.

Get a free, confidential bankruptcy evaluation. Learn More

Chapter 13 Bankruptcy

In contrast to a liquidation proceeding, filing for Chapter 13 bankruptcy allows you to keep your property. During a Chapter 13 bankruptcy case, you create a repayment plan that takes between three to five years to complete. You must file your proposed Chapter 13 either with your bankruptcy petition, or within 14 days after filing your bankruptcy petition. During the repayment plan, you will make a monthly payment to your Chapter 13 bankruptcy trustee, who is then responsible for distributing the funds to your creditors. The repayment plan must be approved by the bankruptcy court; however, you must begin to make payments toward the repayment plan within 30 days after you file your bankruptcy case, regardless of whether the plan is court approved or not. Usually within 45 days after you file your bankruptcy petition, the bankruptcy judge will hold a confirmation hearing to determine whether your proposed repayment plan is feasible.

Meeting of the Creditors

The meeting of the creditors is held about six weeks after you file for bankruptcy. The meeting is run by your bankruptcy trustee and is informal in nature. According to Section 523 of the Bankruptcy Code, you must provide notice to all of your creditors that you have filed for bankruptcy. Your creditors then have the opportunity to appear at the meeting of the creditors and ask you questions about your financial situation and your bankruptcy petition. After the meeting, your creditors have 60 days to file a motion to object to the discharge of specific debts. However, a creditor rarely files a motion objecting to a discharge within the 60 day period.

Bankruptcy Discharge

A bankruptcy discharge eliminates the debts that are listed in your bankruptcy petition. In addition, the debts will no longer be legally enforceable by your creditors, meaning no new legal actions can be initiated against you after you receive a bankruptcy discharge. However, any debts you did not include as part of your bankruptcy case will not benefit from the bankruptcy discharge. In a Chapter 7 bankruptcy, your debts will be discharged at the end of the 60-day period. For a Chapter 13 bankruptcy, you will receive a bankruptcy discharge at the completion of your repayment plan. In addition, the Bankruptcy Code requires you to complete a financial management course before the court will grant a Chapter 7 or Chapter 13 discharge.

Get a free, confidential bankruptcy evaluation. Learn More
Facts About Chapter 7 Bankruptcy

References

Related articles

How Long Is an Automatic Stay After a Chapter 13 Dismissal?

Filing for Chapter 13 bankruptcy creates a repayment plan that allows you to catch up on debt by making monthly payments over three to five years to a Chapter 13 bankruptcy trustee. However, your Chapter 13 bankruptcy case may be dismissed before you complete your repayment plan for several reasons, including if you fail to make your monthly payments to your Chapter 13 bankruptcy trustee or if you miss a required court appearance. The dismissal of your bankruptcy case has several consequences -- including the loss of the protection of the automatic stay.

How Long Is Chapter 7 Active?

A Chapter 7, or debt elimination, bankruptcy case is active until the court issues your final decree, the judgment that officially closes the case. The average Chapter 7 bankruptcy case remains active for around three to six months. The duration will depend on whether you had assets when you filed; a non-asset bankruptcy goes much faster. If you fail to follow court orders or fulfill debtor requirements, the court may dismiss your case before you obtain a discharge of your debts.

How to File for Bankruptcy After a House Is Sold at a Sheriff's Sale

Losing your home to foreclosure through a sheriff's sale may not end your financial difficulties with your mortgage lender. If your home is sold at auction for less than what you still owe on the home loan, the bank may still sue you for the difference plus attorneys' fees and costs. Filing bankruptcy will give you protection from your creditors and wipe clean your debts. Once your bankruptcy petition is filed, an automatic stay is put in place that prohibits creditors from attempting to collect on outstanding bills.

Related articles

What Happens After Meeting of Creditors in Chapter 13?

The meeting of the creditors, referred to as the 341 meeting because of the Bankruptcy Code Section that specifies the ...

What Do I Do When I Leave Out a Creditor in a Bankruptcy?

When you file the initial petition for bankruptcy, you will complete a schedule that lists all of your creditors and ...

Can You Reopen a Bankruptcy Chapter 7?

Under Chapter 7 bankruptcy, most of your consumer debts are discharged by a court order within approximately six months ...

Can Creditors Attempt to Get Money After a Discharge?

When you file a petition for bankruptcy, you are asking a federal court for protection from creditors and time to work ...

Browse by category
Ready to Begin? GET STARTED