This is a question that we get asked a lot by our clients and prospective clients. The answer is “that depends” – it depends on what chapter (type) of bankruptcy we are talking about.
1. Duration of a Chapter 7 Bankruptcy Case
When someone asks how long will a bankruptcy take, they really mean how long is my involvement as debtor (person filing bankruptcy) going to be. The goal of a personal bankruptcy case is to get a discharge. From the debtor’s perspective that can be viewed as the end of the typical bankruptcy case, although the actual case may continue on without affecting the debtor (as discussed further below).
In the typical chapter 7 case involving an individual there are really only three dates we care about. The first is the date the bankruptcy petition is filed with the Bankruptcy Court because that starts the case (and the automatic stay). The second important date is the meeting of creditors, which is usually scheduled about four week after the meeting of creditors. The third date is sixty days from the date first scheduled for the meeting of creditors. That is the very earliest that a debtor is eligible to get her or her discharge (order wiping out debts). However, in actual practice the discharge order takes the Clerk time to process so that the discharge is routinely entered 70-90 days after the date first set for the meeting of creditors. So this means that the length or duration of a typical chapter 7 bankruptcy case is about 100 – 120 days
Occasionally, the chapter 7 trustee assigned to administer a debtor’s bankruptcy case, or the Office of the United States Trustee tasked with overseeing the administration of bankruptcy cases generally, will request that the debtor stipulate (agree) to extent the sixty day deadline to permit further investigation and examination. However, this only happens in a minority of cases.
Even though a debtor may have obtained his or discharge that doesn’t necessarily mean that the case is over. If the debtor had non-exempt assets for the chapter 7 trustee to administer and liquidate to raise cash to pay creditors, the case will remain open while the trustee converts such assets to cash, reviews claims filed in the case, and ultimately pays claims allowed in New York
2. Duration of a Chapter 13 Bankruptcy Case
In a chapter 13 bankruptcy case, the meeting of creditors occurs around the beginning of the case, just as in a chapter 7 case. However, the debtor does not get a discharge until after he or she has made all payments required under the confirmed chapter 13 plan. The length of a chapter 13 plan will typically be between 3 – 5 years. So in a chapter 13 case the debtor will “be in bankruptcy” for considerably longer than in chapter 7. However, one a chapter 13 debtor has confirmed his or her chapter 13 plan and is the process of making payments under the plan for a length of 3 – 5 years, he or she will not have ongoing contact with the Bankruptcy Court or chapter 13 trustee on a regular basis except to forward payments to the trustee each month and to provide the trustee with annual copies of his or her tax returns.