The time it takes a person to file for bankruptcy and have his or her debts discharged varies greatly. It depends on what type the person intends to file, and also how quickly he or she can gather together information about his or her income and debts. Most private individuals file either Chapter 7 or Chapter 13, but the type of filing greatly changes the process.
Chapter 7 bankruptcy is the most common proceeding, and it is usually filed when a person doesn’t have a large number of assets that he or she needs to protect. Generally, the person uses a lawyer who specializes in bankruptcy to help file all the papers required. The part that typically requires the most amount of time when someone is preparing to file for Chapter 7 is gathering all the required information for the form. If a person owes money to numerous creditors, and these creditors have sold their accounts to collection agencies, it may be challenging to figure out who exactly is owed money.
Usually, a person must also provide statements about income, any assets, and tax reports as part of a Chapter 7 filing. If a person has not kept meticulous records of income or debt, it can be challenging to find out all this information. A lawyer may do some of the legwork by tracking down parties who have purchased the debt. All this information needs to be gathered prior to filing, when possible, so the bankruptcy is declared without complications.
Usually, once the bankruptcy papers are officially filed, it takes a month or two, for a court date to be set. At that time, providing that all papers are in order, the court will declare the person bankrupt. This is the end of most debts, but some, like student loans, court feeds, and recent taxes owed, are not discharged. At minimum, the process takes about a month, and often takes longer. Once a person hires a lawyer, however, any calls from creditors can be referred to the legal professional, which may end harassment by creditors.
Chapter 13 bankruptcy is meant to protect a person with a significant number of assets that go beyond normal living requirements. Instead of discharging debts, Chapter 13 works with creditors to reduce debts and come up with reasonable payments. Payment schedules can be constructed on a 3 to 5 year basis, which means that a person can expect to make payments monthly for this length of time. In this sense, though bankruptcy has been declared, the actual process last for several years.