How Long Is the Bankruptcy Process?
It's common for clients to ask a bankruptcy lawyer, "Will the process take long?" No bankruptcy attorney can guarantee whether the process will be long or short. However, there are a few factors that typically determine how long bankruptcy will take.
Type
For the majority of folks, the type of petition is what most dictates the time of the process. Chapter 7 bankruptcy, the liquidation process, usually moves very quickly. This is especially the case if you don't have a lot of non-exempt assets for the court to place valuations on and sell. It's normal for a court to wrap up a Chapter 7 case within months or even weeks.
The restructuring processes are under Chapter 11 for businesses and some high net-worth individuals, 12 for some farms, and 13 for most individuals. Restructuring generally takes much longer from start to completion. The filing process is usually done within a few months. However, after the court grants the petition, the filer normally has to complete restructured payments over the next three to five years.
Forms
Most bankruptcy cases are giant piles of documents. You have to prove you're eligible for the type of bankruptcy you're filing, and you also have to document who your creditors are and what you owe them. The court will want to see your last two years' tax returns, recent pay stubs, bills, and other income and expense documents.
A bankruptcy attorney may take several weeks to get the documents in order if the client has a complex case. Understandably, this may add a bit of timea to the process.
Objections
Creditors have the legal right to object to bankruptcy petitions. Notably, they don't have significant powers to push the court and the petitioner in any of the processes except Chapter 11. Creditors can even propose their own restructured payment plans. This is why generally only businesses and some wealthy people file Chapter 11 petitions. It's usually not worth the hassle of listening to creditors' objections and plans.
In a Chapter 7 case, the court will have little interest in creditors' objections. Unless a creditor can prove a filer is committing fraud, a judge will typically move forward with the liquidation process whether the creditors like it or not. Chapter 13 tends to go the same way.
However, the court will offer some time to creditors if they have concerns. It's normal to schedule a meeting of the creditors, and they're even allowed to place the petitioner under oath. This is a fairly rare occurrence, though.
For more tips and information, contact a bankruptcy lawyer near you to learn more.