How Fast is Bankruptcy?
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How Fast is Bankruptcy?

Bankruptcy's primary benefit is its potential to eliminate some or all of a filer's unsecured debts. With thousands of dollars in debt often at stake, speed is not necessarily bankruptcy's most important asset.

Nevertheless, many filers are surprised to discover how efficient bankruptcy can be. Chapter 7 cases usually take several months, while chapter 13 offers long-lasting debt relief in just a few years. The speed of bankruptcy, though, varies case by case.

Most importantly, bankruptcy offers unique protections that kick in as soon as you file your case with the court. The lasting effects become permanent once the court issues a debt discharge at the end of the case.

How Fast is Chapter 7 Bankruptcy?

Between the two primary chapters of personal bankruptcy, Chapter 7 is usually the swiftest. Depending on a filer's number of assets, and the complexity of the case, Chapter 7 may be over in just a few months.

Here are the possibilities in Chapter 7 bankruptcy:

  • Limited asset case. If filers have very limited or no assets, there is nothing for their creditors to pursue. As a result, cases where the filer has no assets are usually over in about four months.
  • Asset-based filing. In Chapter 7 filings where the filer has more assets, the process may take a bit longer as the court and creditors sort out the filer's non-exempt property. While the filing may take as little as four months, a few more months may pass before the case is settled.

Remember, though, that other benefits of bankruptcy occur immediately after the petition is filed. These include benefits such as bankruptcy's ability to end wage garnishment, stop collection lawsuits, and prevent creditors from harassing filers.

How Fast is Chapter 13 Bankruptcy?

On the other hand, Chapter 13 usually takes between three and five years. Why the longer timeframe? Well, Chapter 13 is designed for people with steady incomes who wish to pay their debts at a more reasonable pace.

Chapter 13 bankruptcy is usually stretched over a period of a few years to allow filers with a reliable source of income to maintain a reasonable standard of living while paying off their debts at an affordable rate.

In addition, the filing of a Chapter 13 petition may immediately:

  • Stop home foreclosure proceedings
  • Prevent car repossession
  • Stop wage garnishment and lawsuits

The speed of your bankruptcy depends largely on your unique circumstances and your state’s laws. To learn more about how fast your bankruptcy might go, contact a local bankruptcy attorney today.

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