Bankruptcy Timeline: Steps To Complete Before Your Filing Date
Federal law requires you to complete a credit counseling course during the six-month period before filing bankruptcy. However, you have other prep work to do before your bankruptcy timeline officially starts, such as:
Important: You must complete all above tasks in the 180 days before your filing date. This is true regardless of whether you file Chapter 7 or Chapter 13 bankruptcy.
How Can I Get A Copy Of My Credit Record
There are two ways to get your credit report : either through the mail or via the internet. If you want to obtain your credit report for free, you must use the mail. It is also important to do what you can to make sure your credit report shows a history of reliable credit repayments, and as few unfavorable repayment incidents as possible.
For more detailed information related to credit reporting, visit Equifax Canada or Trans Union website. Talk to a licensed trustee today. We have trustees everywhere from Calgary to Montreal and more. Get a free consultation today!
How Long Does It Take To File Chapter 13 Bankruptcy
The decision to file bankruptcy is a weighty one. And if youre unsure how it works, starting the process could be both intimidating and overwhelming. So how long does it take to file Chapter 13 bankruptcy? And what can you expect during the timeline?
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Phase : Discharge Case Closed
Once the bankruptcy trustee has determined that thereâs no property they can sell for the benefit of creditors, theyâll file a Report of No Distribution. This lets everyone know that itâs a no-asset case and can happen anytime after the 341 meeting. No asset cases are typically closed by the court within 1 – 2 weeks or so.
If the trustee hasnât filed a Report of No Distribution, the case will stay open until the trustee signals to the court that theyâve completed their work on the case. How long this process takes can vary greatly, as it depends on what kind of property the trustee is selling and what else is going on in the case.
In some cases, all the trustee is waiting for is the filer’s tax return for the year their bankruptcy case is filed in. If no specific exemption for a tax refund exists, a portion of the refund may be used by the trustee to pay creditors.
Usually, not much else is required from the filer during this process. But, if the trustee asks for additional information or otherwise requests assistance with the sale of property, the filer has a duty to help.
The Bankruptcy Process At A Glance
Your Licensed Insolvency Trustee will help you to prepare and file all required paperwork. As soon as all documents are filed, harassing collection calls from creditors and wage garnishments will stop. During the bankruptcy process, you will be required to perform the following duties:
File monthly income and expense reports with your Licensed Insolvency Trustee to keep your budget in check and monitor any surplus income.
Attend two counselling sessions, during which you will examine the causes of your financial difficulties and work on debt-management strategies including budgeting, expense tracking and restoring your credit rating.
Provide your Licensed Insolvency Trustee with all necessary tax information to prepare and file your tax returns for the year in which you file bankruptcy .
Pay your Licensed Insolvency Trustee any necessary amounts, such as required surplus income payments, costs to repurchase any non-exempt assets, or administration fees.
Receive your bankruptcy discharge: If you have completed all necessary steps and duties, you will automatically be discharged from your remaining debts at the 9- or 21-month mark . Some remaining steps may be required, as set out in your court order.
Rebuild your credit rating: During your mandatory counselling sessions, you will work with your Licensed Insolvency Trustee to develop strategies for restoring your credit rating both during the bankruptcy period and in the long term.
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Talk To A Bankruptcy Lawyer
Need professional help? Start here.
We Can Help You Discharge Overwhelming Debt Through Bankruptcy
Filing bankruptcy does not have to be a daunting process. Our team represents individuals and small business owners who need the debt relief of Chapter 7 bankruptcy. Contact a case review team member today to find out how long it takes to do a Chapter 7 bankruptcy and how soon you might expect to benefit from a fresh start. Call to reach the Rutherfordton office at Farmer & Morris Law, PLLC, today.
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Can Your Bankruptcy Case Be Reopened
Even after your case is closed, the trustee, your creditors, or you can request that the court reopen your case. If the trustee or your creditors discover that you provided false information on your bankruptcy papers or didn’t disclose all of your property, they can ask the court to reopen your case in order to administer those assets or even revoke your discharge.
In some cases, you may also want to reopen your bankruptcy. For example, if you accidentally forgot to list a debt or if a creditor is violating your discharge, you might ask the court to reopen your case to address these issues.
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Meeting Of Creditors: Up To 60 Days After Filing
Between 21 and 60 days after your Chapter 13 case is filed, your trustee will hold a meeting of creditors. During the court hearing, the trustee will verify your information and ask you questions about your financial situation and your proposed Chapter 13 plan.
This meeting is open to the public, and it is likely that other Chapter 13 filers will be in the courtroom at the same time as you. However, bankruptcy judges do not attend this meeting so they can remain impartial.
If the trustee is satisfied with your proposed repayment plan and paperwork, he or she will conclude your hearing. If there is an issue with your paperwork, the trustee will continue the hearing to a later date. In order to conclude the hearing during the first date set, you can speak with the trustee ahead of time to discuss any questions or concerns you may have about your proposed plan.
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The Normal Automatic Discharge
The vast majority of bankruptcies in Canada are automatically discharged after a period of nine months. Thus, most people can get on with their lives rather quickly after filing for bankruptcy. If you do not qualify for an automatic bankruptcy discharge either because you are required to pay surplus income or because you have been in bankruptcy before, your time in bankruptcy will be longer. Based on certain criteria, the automatic discharge of your bankruptcy may also be extended even though you are in bankruptcy for the first time or do not have to pay a surplus income.
Will I Ever Be Able To Rebuild My Credit
Absolutely! Filing for bankruptcy will have a serious effect on your credit score. However, it is not impossible to repair your score once your bankruptcy case has ended. Through responsible financial management, you can rebuild your credit score and be back on track of your finances.vAfter you file for bankruptcy, your credit score may drop at least 200 points. The bankruptcy can also help by clearing up your debt to income ratio. In order to rebuild your credit, it is imperative that you pay all of your bills on time going forward. This will show creditors that youre financially responsible. Another way of rebuilding your credit is monitoring your credit report. Staying up-to-date and making sure your credit report is correct is crucial, as inaccuracies and errors can slow down the rebuilding process. Learn more about rebuilding your credit after bankruptcy here.
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Debt That Can’t Be Forgiven
While bankruptcy can eliminate a lot of debt, it can’t wipe the slate completely clean if you have certain types of unforgivable debt. Types of debt that bankruptcy can’t eliminate include:
- Most student loan debt .
- Court-ordered alimony.
- A federal tax lien for taxes owed to the U.S. government.
- Government fines or penalties.
How Can The Debtor Obtain Another Copy Of The Discharge Order
If the debtor loses or misplaces the discharge order, another copy can be obtained by contacting the clerk of the bankruptcy court that entered the order. The clerk will charge a fee for searching the court records and there will be additional fees for making and certifying copies. If the case has been closed and archived there will also be a retrieval fee, and obtaining the copy will take longer.
The discharge order may be available electronically. The PACER system provides the public with electronic access to selected case information through a personal computer located in many clerk’s offices. The debtor can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically.
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How Bankruptcy Affects Your Credit
Filing for bankruptcy makes it challenging to receive credit cards or lower interest rates because lenders will consider you risky. These consequences could occur immediately, affecting any short-term needs such as getting affordable interest rates or approval from prime lenders.
Rebuilding your credit as soon as possible is paramount. One way to increase your credit score is to pay all your bills on time each month, creating and sticking to a budget and not incurring more debt.
You should also avoid overuse of credit cards and failing to pay balances in full each month. Having a good credit score gives consumers access to more types of loans and lower interest rates, which helps them pay off their debts sooner.
Typical Filing Timelines By Types Of Bankruptcy
Chapter 7 is a form of liquidation bankruptcy. Under Chapter 7 bankruptcy, all nonexempt assets will be reviewed and sold off with the help of a bankruptcy trustee. The bankruptcy court will pay your creditors with the proceeds of those sales and discharge remaining unpaid unsecured debts.
Under Chapter 7 Bankruptcy, only unsecured debts are discharged. Secured debts such as a mortgage or a car loan require you to either relinquish them or continue paying according to the terms of the loan.
A Chapter 7 bankruptcy filing may be completed in three to seven months.
Chapter 13 bankruptcy reorganizes your debts. When you file for Chapter 13, the court evaluates your total debt obligations and sets a court-ordered repayment plan that typically spans 3-5 years. Under this plan, repayment is typically equal to the value of your nonexempt assets.
A Chapter 13 filing can take anywhere from 24-60 months to complete depending on the amount of your debt and the repayment plan that is established.
How Long Do Bankruptcies Stay On Your Credit Report
The length of time that a bankruptcy filing stays on your credit report depends on what type of bankruptcy you filed. We took a look at Chapter 7 and Chapter 13, which are the two main types of consumer bankruptcies, and to see how their impacts on your credit score differ.
- Chapter 7 bankruptcy: Also known as liquidation bankruptcy, Chapter 7 is what Harrison refers to as “straight bankruptcy.” It’s the most common form of consumer bankruptcy and is usually completed within three to six months. Those who file for Chapter 7 will no longer be required to pay back any unsecured debt , like personal loans, credit cards and medical expenses, but they may have to sell some of their assets to settle secured loans. Chapter 7 bankruptcies stay on consumers’ credit reports for 10 years from their filing date.
- Chapter 13 bankruptcy: Harrison refers to Chapter 13 as the “wage earner’s bankruptcy.” This form of filing offers a payment plan for those who have the income to repay their debts, just not necessarily on time. About a third of bankruptcies filed are Chapter 13 . Those who file are still required to pay back their debts, but instead over a three-to-five year time frame. Chapter 13 bankruptcies stay on consumers’ credit reports for seven years from their filing date.
Repayment Plan Period: 3 Or 5 Years After Filing
Once the bankruptcy court approves the repayment plan, you and your creditors are bound to it. You are responsible for ensuring the trustee receives your payments on schedule. During your repayment period, you may not incur new debts, such as taking out a new mortgage or opening a new credit card, without approval from your trustee.
Periodically, your trustee will send you statements showing the amount paid to each creditor, and the remaining amount due. Each year while the plan is in effect, you will be responsible for sending the trustee income and expense statements.
Since your repayment plan covers several years, there are many potential life changes that may make the plan untenable. People lose their jobs and get sick, making them unable to work. In these situations, you can seek to have your repayment plan modified, even after it was confirmed.
Finally, before you make your final payment under your plan, you must file a certificate with the court showing you completed a course in personal finance management.
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How Does Chapter 7 Bankruptcy Work
You’ll also get to keep the property you’ll need to maintain your home and job. Things that you can’t protect under your state’s exemption statutes get sold. The proceeds go to repay your creditors.
Do You Have Surplus Income
If your monthly income is $200 or more in excess of the current surplus income limit set by the government, it is possible that your bankruptcy will be extended for longer than nine months, and you will be required to pay a portion of this income into your bankruptcy.
It is not wrong to make surplus income, but it is only fair that a portion of it be paid to your creditors. Having surplus income also lengthens the period you are bankrupt usually to twenty-one months for first-time bankruptcies.
For more information, see our page on surplus income.
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What Debts Are Discharged In Chapter 7 Bankruptcy
A Chapter 7 bankruptcy will generally discharge your unsecured debts, such as credit card debt, medical bills and unsecured personal loans. The court will discharge these debts at the end of the process, generally about four to six months after you start.
Some types of unsecured debts usually aren’t discharged through a Chapter 7 bankruptcy, including:
- Child support
- Personal injury debts you owe due to an accident while you were intoxicated
- Unsecured debts that you intentionally left off your filing
Your creditor could also object and keep certain debts from getting discharged. For example, a credit card company could object to the debt from recent luxury goods purchases or cash advances, and the court may decide you still need to repay this portion of the credit card’s balance.
Additionally, a Chapter 7 bankruptcy may discharge the debt you owe on secured loans. Secured loans are those backed by collateral, such as your home for a mortgage, or when a creditor has a lien on your property. However, even if the debt is discharged, the creditor may still have the right to foreclose on or repossess your property.
The Extended Automatic Discharge
Individuals who have never filed for bankruptcy before will spend a total of twenty-one months in bankruptcy if they are required to pay surplus income to their bankruptcy trustee. If this is your second bankruptcy, your time in bankruptcy protection is automatically twenty-four months, and it will be extended to thirty-six months if you are required to pay a surplus income.
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Is There Life After Filing Bankruptcy
Your credit score may decrease initially when you file your bankruptcy depending on your score before filing. Either way, it should start to increase shortly afterwards. Steps you can take to improve your credit include financing a new vehicle, making timely payments on a new credit card, opening a secured line of credit through your bank, and filing bankruptcy with a $0 down payment plan. Our office offers a $0 down payment plan that credit reports your payments to help your score rise faster after bankruptcy. Thus, when considering an attorney, carefully choice a debt relief lawyer with a credit rebuilding program that has been tried and gets results.
You will have to wait 2 years after your bankruptcy before you can qualify for a home loan. However, this shouldnt prevent you from renting. Many of our clients are able to finance a new vehicle the day after they file and receive plenty of offers for new lines of credit. For more information about a Zero Down Bankruptcy or $0 Down bankruptcy, please consider contacting our bankruptcy attorney.