Most people who file for bankruptcy have been struggling with debt for quite a while and are understandably eager to get the process over with and move forward, which makes knowing how long the process can take a popular topic to question. In Los Angeles, concerns about timing may be aggravated by the size of the territory and the number of filings. The U.S. Bankruptcy Court for the Central District of California is the largest bankruptcy court in the country, serving seven counties spanning about 40,000 square miles. For the 12-month period ending in June of 2019, just one bankruptcy court in the U.S. had more filings.
But, bankruptcy isn’t a court-heavy process, and the caseload is divided. The Court has separate offices in Los Angeles, Riverside, Santa Ana, the San Fernando Valley, and Santa Barbara (also known as the unofficial “Northern division”). For those filing Chapter 7 bankruptcy, the news is good: most Chapter 7 cases can be completed in 4-6 months.
For many bankruptcy filers, though, how long it takes to complete the case and receive a discharge isn’t the most important question. That’s because both types of bankruptcy offer some important relief long before discharge.
The Automatic Stay Takes Effect Immediately
For most people who file consumer bankruptcy–Chapter 7 or Chapter 13–an automatic stay takes effect right after filing. Though discharge and the closing of the bankruptcy case may be months or years away, the automatic stay can bring immediate relief. The stay order temporarily stops all types of collection activity, from harassing phone calls to lawsuits and wage garnishments. If a creditor or debt collector violates the automatic stay and continues to pursue collection action, the collector may be punished by the bankruptcy court.
Though there are some exceptions, the stay generally remains in effect until the bankruptcy case is completed or dismissed. That means most collection activity will stay on hold for as long as it takes to wrap up the bankruptcy case. So, most consumer bankruptcy filers begin to see the benefits of filing bankruptcy right after the petition is filed, rather than having to wait for a discharge for their circumstances to improve.
Timelines for Completing a Consumer Bankruptcy Case
Chapter 7 Bankruptcy
The process in most Chapter 7 cases goes like this:
- Preparation of petition and schedules with your attorney
- Complete credit counseling pre-filing
- Filing of petition and schedules
- Meeting of creditors (usually about one month after filing)
- Waiting period for creditor objections (generally, 60 days from the meeting of creditors)
- Complete personal financial management course, also called “debtor education” (any time after filing and before discharge)
- Receive discharge
Generally, this can be completed in a period of 4-6 months. However, the process may be delayed under certain circumstances, such as:
- The trustee requests additional documentation at the meeting of creditors and you don’t provide that information promptly
- The trustee or a creditor objects to an exemption, dischargeability of a debt, or your eligibility for a discharge
- You don’t complete the required debtor education course in a timely manner
Fortunately, these factors are largely in your hands. If you and your attorney provide complete and accurate information when filing and have all necessary documentation in hand at the meeting of creditors, you will likely avoid any delay due to additional document requests. If you don’t drag your feet on completing your personal financial management course, that won’t hold up your discharge. And, while you can’t fully control whether the trustee or a creditor objects, being thorough and honest in the preparation of your case significantly minimizes the risk.
Chapter 13 Bankruptcy
Successful completion of a Chapter 13 bankruptcy case typically takes slightly more than three or slightly more than five years. That’s because the core of the Chapter 13 case is a 36-month to 60-month repayment plan.
Thus, unless something unusual happens to cut off a case sooner, the minimum for successful completion of a Chapter 13 case is just over three years. The only way to successfully complete a Chapter 13 plan in less than three years is to receive a hardship discharge due to a significant, ongoing change in circumstances such as a catastrophic illness.
Although most Chapter 13 cases take a few years to complete successfully, the benefits of a Chapter 13 case take effect with the entry of the automatic stay and continue throughout the plan. As long as plan payments are current, creditors and debt collectors can’t take action to collect those past-due amounts, and the debtor may even see benefits like lower interest rates and fewer fees.
If you’re struggling with debt and wondering whether consumer bankruptcy may be the solution you’re looking for, don’t ask how long the whole process will take–ask what bankruptcy can do for you in the short-term and the long-term. You can schedule a free consultation with an experienced Los Angeles bankruptcy attorney right now by calling 877-413-5221 or filling out the contact form on this site.
M. Erik Clark is the Managing Partner of Borowitz & Clark, LLP, a leading consumer bankruptcy law firm with offices located throughout Southern California. Mr. Clark is Board Certified in Consumer Bankruptcy by the American Board of Certification and a member of the State Bar in California, New York, and Connecticut. View his full profile here.