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How Long Do Chapter 7 Bankruptcies Last?
If you’re wondering how long chapter 7 bankruptcies take, it’s important to understand the basic rules that govern bankruptcy. These include waiting time, discharges, and exceptions. These rules differ in different states, so check your local bankruptcy laws for more information.
Discharges
Most Chapter 7 bankruptcy cases conclude with a discharge, which is an order by the court to forgive the qualified debt. While nonexempt assets can be kept open for longer, most cases close soon after the discharge is granted. The trustee sells the assets, distributes the funds, and files a report with the court.
If the bankruptcy case is proceeding well, the debtor will receive the discharge letter. The court will order that all discharged debts are entirely erased unless creditors contest them. However, the bankruptcy case may continue if the debtor must sell assets or engage in litigation.
Depending on the circumstances, a chapter 7 bankruptcy case can take anywhere from four to six months. There are many moving parts in the process, and any one of them can delay the process. The filing of the case can also cause a delay. A delay in filing the bankruptcy petition can cause the discharge to take longer.
When can I file for Chapter 7 bankruptcy? Depending on the circumstances, you may need to file Chapter 7 bankruptcy again after filing a Chapter 13 bankruptcy. However, you must wait at least four years before filing Chapter 13 again. Unless your situation changes dramatically, you should wait at least four years before filing a chapter 7 bankruptcy.
Once a chapter 7 bankruptcy discharge has been completed, most consumers must wait two to four years before getting a home loan. Early approval for this type of loan is rare unless you were forced into it. Generally, a Chapter 7 bankruptcy discharge will leave your credit score in the mid to low 400s. To qualify for a home loan, you must score at least 580.
Waiting Time
The waiting time for chapter 7 bankruptcy varies depending on the individual court. Typically, a two-year waiting period applies to chapter 7 bankruptcy, but it can be shorter if you prove extenuating circumstances. In some cases, you can even get a Chapter 7 discharge after a year.
Before filing for chapter 7 bankruptcy, you must complete a Chapter 13 case. This will mean that at least 70% of your creditors’ claims must be paid off. Moreover, you must have made a “good faith” repayment plan, which means using all your disposable income to pay back creditors. After the filing, you’ll have to wait at least six years before you can file a chapter 7 bankruptcy again.
After a chapter 7 bankruptcy, you’ll have to rebuild your credit. In addition to making sure that you’re not taking on new debt, you’ll also have to wait another year before you can apply for a mortgage. You’ll be able to buy a house within one to two years, but you’ll have to be cautious when applying for a mortgage after bankruptcy.
When the court receives your Chapter 7 bankruptcy petition, it will notify creditors to cease collection activities. In addition, it will set a date for your 341 meeting with creditors. This meeting of creditors may take anywhere from twenty to forty days. A bankruptcy trustee will place you under oath at this meeting, and your creditors can ask you questions. In most cases, this meeting of creditors will take less than ten minutes.
Chapter 7 bankruptcy usually takes about four to six months to process. There are a lot of moving parts that can slow down the process. Missing or delaying any of them can make it take longer. However, this is not the case with every case. Generally, a chapter 7 bankruptcy will take around four to six months from filing until the final discharge.
After a chapter 7 bankruptcy is discharged, most people need to wait two to four years before they can apply for a home loan. However, some people may be able to obtain a home loan in as little as two years. This is because a chapter 7 bankruptcy is generally recorded on a person’s credit report for ten years.
Assets Not Discharged
When filing a Chapter 7 bankruptcy, you must list all your debts, including those that are not exempt. If you fail to list these debts, you will remain responsible. A bankruptcy trustee will sell your non-exempt property to pay your creditors.
In addition, bankruptcy cases involving assets are also known as asset cases. Unlike a regular bankruptcy case, however, the assets not listed in a Chapter 7 bankruptcy will not be discharged.
In addition to the property, other non-discharged assets include certain types of debt. These include mortgages and car loans. If you fail to pay your mortgage, creditors can repossess your car. Chapter 7 bankruptcy offers three options for these types of debt. The debtor can choose to discharge the rest of the debt, or he or she can reaffirm it.
Unlike personal bankruptcy, chapter 7 bankruptcy does not allow you to sell your property. The trustee can liquidate your nonexempt assets and distribute the proceeds to your unsecured creditors. However, this does not necessarily mean that you will lose your house or car. If you have real estate, the trustee will sell it and use the money to pay your creditors.
The trustee will issue a Notice of Assets if a Chapter 7 bankruptcy case involves an asset. The trustee will also set a Proof of Claim bar date. This bar date will be mailed to your creditors. This is similar to the bar date in a Chapter 13 bankruptcy case.
Most individuals opt for Chapter 7 bankruptcy because they have few or no assets. In this type of bankruptcy, a debtor must pass a means test and hand over their assets to a bankruptcy trustee.
However, there are some types of debts that cannot be discharged. Some types of debts, including student loans and taxes, are not discharged under this type of bankruptcy.
Usually, most debts are discharged under a chapter 7 bankruptcy. However, some are not; you must discuss these with a competent attorney.
Exceptions
There are some exceptions to Chapter 7 bankruptcy that you might not know about. Some of these exceptions are based on your circumstances. For example, if you are a low-income debtor, you might qualify to have the Chapter 7 fees waived. The bankruptcy court considers your current monthly income and expenses in determining whether you qualify for this exemption.
If you own a car, you may be able to keep it if its value does not exceed $7,500. Other things you can claim as exemptions include medical supplies and household goods. Certain insurance benefits may also be exempt. If you are in Louisiana, you can claim up to five thousand dollars worth of wedding rings as an exemption.
If you are a military reservist or National Guard member, you will likely be able to get a Chapter 7 bankruptcy exemption. Veterans can also qualify for this exemption if they meet specific requirements.
Disabled veterans are exempt from the means test if they have a 30% disability rating and were discharged from active duty for a disability related to their line of duty.
Chapter 7 bankruptcy will not eliminate your debts but can protect your assets. If you have a home or car that is not exempt, the bankruptcy trustee can sell it and distribute the proceeds to your creditors.
As part of the process, you can keep specific “exempt” property, such as a car or retirement account. However, you may have to give up other property, such as a second home or luxury items.
Filing a chapter 7 bankruptcy petition will stop most collection actions. However, some actions can only be stopped for a short period. In such cases, you might consider another option, like chapter 11 or 13, which allows you to restructure your debt to avoid bankruptcy.
There are many moving parts and legal processes in bankruptcy. Figuring out your exemptions is only one piece of the puzzle, but it can make a world of difference in the long run. An attorney can help you with the filing paperwork in bankruptcy court and advocate for you in any necessary hearings.