By: Anne Smith, Attorney
Over the years, I’ve been asked by clients how long a bankruptcy case will last. As a former debtor’s attorney, and now as a creditor’s attorney, I am still asked this question. Below is a general summary of the timeline for a chapter 7 bankruptcy case – keep in mind that many factors can alter this timeline, and this should be viewed only as a guideline.
A Chapter 7 bankruptcy case begins once a Petition is filed with the Bankruptcy Court. The debtor’s petition includes Schedules listing assets, creditors, income, expenses, executory contracts, leases, and co-debtors. The Schedules are usually, but not always, filed at the same time as the Petition. Other supporting documents, such as the Declaration Regarding Payment Advices and Credit Counseling Certificate, along with the filing fee, are also typically filed together with the Petition.
Immediately: The automatic stay order is issued immediately upon filing. This stops all actions that affect the debtor, his/her income or assets of the bankruptcy estate. Garnishments on bank accounts and paychecks, and lawsuits or foreclosure actions are halted once creditors are notified of the bankruptcy filing. A Trustee will be assigned to the bankruptcy case.
Two weeks after filing: The Bankruptcy Clerk will mail creditors the Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines, which provides the date set for the meeting of creditors and other important deadlines. Many districts indicate whether a creditor should or should not file a Proof of Claim at that time.
Within 30 days of filing: Debtor must file a Statement of Intention, if not already filed with the petition, informing the court if he/she plans to keep or surrender any collateral property.
Approximately 4 weeks after filing: The Meeting of Creditors, often referred to as the 341 meeting, will be held. Creditors may attend and are permitted to ask questions of the debtor, usually about disposition of collateral, valuation or reaffirmation plans.
30 days after the 341 Meeting: Deadline for the Bankruptcy Trustee or creditors to object to any exemption claims. Debtor will need to surrender the property, reaffirm the debt, or redeem property for the allowed secured claim, as indicated in the debtor’s Statement of Intent. Anticipate additional pleadings, e.g. reaffirmation agreement, motion to redeem.
60 days after 341 Meeting: Creditors must object to discharge of debts that were obtained by false pretenses, a false representation, or actual fraud; debt from fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny; and debt for willful and malicious injury. This deadline applies to objections to discharge of: consumer debts owed to a single creditor of more than $500 for luxury goods or services obtained within 90 days before a Chapter 7 bankruptcy, or cash advances totaling $750 or more within 70 days prior. Creditors may also object to discharge of debts involving misconduct, including transfer, destruction or concealment of property; concealment, destruction, falsification or failure to keep financial records; making false statements; withholding information; failing to explain losses; failure to respond to material questions; or having received a discharge in a prior bankruptcy case filed within the last 6 years. In most jurisdictions, the deadline for objection to discharge will be clearly set out in the Notice deadlines issued by the clerk to creditors early in the case. However, if a specific date is not set for filing of the objection, then the deadline is sixty days after the first date set for the 341 meeting of creditors. An adversary proceeding is required to determine the non-dischargeability of a debt.
More than 60 days after 341 Meeting: Debtor’s discharge will be issued by the Bankruptcy Clerk. However, at this point in time, the discharge is not absolute or final. The trustee can ask that the discharge be set aside if the debtor does not turn over non-exempt property, if the debtor fails to perform other duties, or if there were other matters pending which would result in the denial of the discharge. Because the discharge is not completely final at this point, we often counsel our clients to wait until the case is closed before taking any action without relief from stay.
If assets are found available for liquidation to pay creditors, the Trustee will issue a notice for creditors to file Proofs of Claim and will provide a deadline to do so, if creditors wish to share in the payments from debtor’s bankruptcy case.
At some point around the six-month mark, a Discharge will be entered by the Court, and the case will be officially closed. If the Trustee is liquidating non-exempt assets, the bankruptcy case will remain open to allow the Trustee to distribute the funds to creditors and file a final report.
Caveat: Any number of reasons or events, or even local rules of the courts, may affect this timeline. Contact your legal counsel for further information.