How Long Will My Bankruptcy Case Last?
The length of a bankruptcy case depends on which bankruptcy chapter is filed by the debtor. There are three major types of bankruptcy: Chapter 7, Chapter 13, and Chapter 11. The first two bankruptcy chapters apply to individual debtors, and the first and third chapters apply to corporate debtors.
Many debtors wonder how long a bankruptcy case will last, should they decide to file for bankruptcy relief. It is possible that the length of the bankruptcy case may be a determining factor over whether to file bankruptcy, and if a filing is inevitable, which particular chapter of bankruptcy to consider filing. A helpful rule of thumb is important to remember in the background throughout such considerations: If a debtor has enough money to repay all of his debts within three years, after subtracting his monthly bills from the amount of eligible repayment funds, then a strong case may be made for staying put and making no bankruptcy filing whatsoever.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy case is called a liquidation and is generally deemed the most straightforward type of bankruptcy filing. The end goal of the case is to discharge personal debt.
The entire case proceeding from beginning to end of a Chapter 7 bankruptcy can take anywhere from four to six months. The major reasons this timeframe is extended relate to creditor objections to a debtor's bankruptcy filings or problematic filings by the debtor (incomplete, needing amendment, etc.). This type of bankruptcy is quickly administered and concluded.
Chapter 13 Bankruptcy
Unlike their Chapter 7 counterparts, Chapter 13 bankruptcies are more complex and center on repayment plans. These bankruptcies are often dubbed reorganizations. There are many additional steps and procedures involved in this type of bankruptcy proceeding than in a typical Chapter 7 case.
As such, Chapter 13 bankruptcy cases can take, on average, 36 to 60 months to complete. Sixty months is the statutorily-defined maximum period of time that is permitted under federal bankruptcy law for the completion of a Chapter 13 plan.
Chapter 11 Bankruptcy
A Chapter 11 bankruptcy filing for a corporate debtor is a complex process that is usually planned months in advance with the assistance of financial professionals and counsel. The filings are typically voluminous and complex. These cases often move quickly once "first day motions" that commence the case are filed and heard. Sometimes, introductory motions are even filed and heard in an expedited manner because of sensitive issues surrounding the significance of the timing of the bankruptcy filing. That said, due to the size of corporate debtors, their operations, debts, assets, and other similar considerations, cases can span for multiple years just to complete administration of those items.