aef5d05808381bc6292be53130c4cf0f - The Process and Timeline of Bankruptcy

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Bankruptcy is a legal status for individuals who are unable to pay their debts. The process and duration of bankruptcy vary depending on the type of bankruptcy that applies to your situation.

If you believe you may need to declare bankruptcy, it is recommended to consult with a bankruptcy attorney. They can provide guidance on your options and whether bankruptcy is a suitable choice for you. Additionally, they can explain your rights and alleviate any concerns you may have about the bankruptcy process.

To assist you, the attorney will require information about your finances. Therefore, gather important documents such as recent bills from each creditor, collection letters and court papers, notices regarding shut-offs, repossessions, or foreclosure, several recent pay stubs, tax returns from the past two years, and your driver’s license and Social Security card.

The timeline for bankruptcy depends on the type of bankruptcy you file for. Chapter 13 takes three to five years, while Chapter 7 is approximately a 90-day process. Timelines can also vary by state. The general steps in a bankruptcy timeline include:

Before Filing:
– Complete a bankruptcy counseling session with an approved agency within 180 days before filing.
– Check if your state requires a specific residency period before filing for bankruptcy.

– File a bankruptcy petition, which is the legal document indicating your intention to seek bankruptcy relief. Your attorney will determine the appropriate type of bankruptcy for your situation.

After Filing:
– Within the first 15 days, provide significant paperwork to the court, including information about your assets, income, expenses, and liabilities. If filing for Chapter 13 bankruptcy, you will need to create a repayment schedule.
– Within 30 days of filing a Chapter 13 case, make your first payment to the bankruptcy trustee. In a Chapter 7 bankruptcy, reaffirm your debts within the first 30 days, indicating the debts you wish to keep, such as a mortgage or car loan.
– Around 45 days after filing, attend a Meeting of Creditors, also known as a “341 meeting” or hearing, where you will testify under oath regarding the information provided to the court.

– When the bankruptcy court determines that you are no longer responsible for a debt, it is discharged. Before your debts can be discharged, you must complete a two-hour bankruptcy education course. Your attorney can assist in locating an approved agency and scheduling a session.
– In a Chapter 7 case, debts are usually discharged within four to six months after filing. In a Chapter 13 case, the timeframe depends on the repayment schedule but typically takes three to five years.

It is recommended to begin with free financial and debt counseling to better understand your options. If you are uncertain about what steps to take, reach out for assistance. Our National Foundation for Credit Counseling (NFCC)-certified counselors offer free services to review your situation, explain your options, and help develop a plan for moving forward.

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