Timeline for a Chapter 7 Bankruptcy

One question I get frequently is “what is the timeline of a typical Chapter 7 Bankruptcy?” So, here is a timeline:

  • Pre-filingTime: varies widely
    • Before filing a bankruptcy case a debtor and a debtor’s attorney are required to compile a great deal of financial information about the debtor and to investigate that information. (FRBP 9011 actually requires that a reasonable inquiry be made into the factual contentions made in bankruptcy documents. Failure to do so can result in monetary sanctions against the debtor or the debtor’s attorney.)
    • After all of the information has been gathered and verified, the schedules and statements need to be prepared using the information.
    • The timeline for completing these tasks are really dependent on how long it takes the debtor to compile the information and how long it takes the attorney to prepare the necessary documents. This can vary widely from debtor to debtor and from attorney to attorney.
  • Filing. This is the point in time at which the Chapter 7 bankruptcy voluntary petition is filed with the bankruptcy court, and we will use as a reference point throughout. At the time of filing, the automatic stay goes into effect, which keeps creditors from attempting to collect from the debtor.
  • 521 Documents to Trustee.  Time: no later than approx. 21 days after filing. Debtors are required to provide certain documents to the Chapter 7 Trustee, including paystubs and tax returns. Debtors must do so no later than 7 days before the 341 meeting of creditors, and the trustee should receive these documents by then, so debtors should plan to mail them earlier.
  • First 341 Meeting of Creditors. Time: approx. 30 days after filing. The 341 meeting of creditors is an opportunity for creditors to ask questions of the debtor under oath. A Chapter 7 Trustee will ask at least some questions of the debtor and will investigate whether there are assets to liquidate. The bankruptcy rules require that the first Chapter 7 341 meeting be held no earlier than 21 days after filing and no later than 40 days after filing. The meeting may be continued to another date for further questioning, if the trustee needs additional information.
  • Notice of No Distribution or to File a Proof of Claim. Time: Approx. 45 days after filing. If the Chapter 7 Trustee discovers assets that can be liquidated for the benefit of creditors, the Trustee will file a notice to file a proof of claim. If not, the trustee will file a notice of no distribution. While there is no time limit in which these items can be done, they are usually done within about 10 days after the conclusion of the 341 meeting of creditors.
  • File Debtor Education Certificate. Time: Within approx. 75 days after filing. The rule requires that the debtor education certificate be filed within 45 days after the meeting of creditors, which is usually approximately 75 days after filing.
  • Discharge. Time: Approx. 95 days after filing. The discharge is the legal decree that says creditors are no longer allowed to attempt to collect on a particular debt. Creditors and other interested parties can object to discharge within 60 days after the first 341 meeting. If no one objects, the discharge is usually entered within a few days of the running of the deadline.
  • Final Decree (in a no-asset case). Time: Approx. 100 days after filing. The final decree says that the bankruptcy case is finished, the trustee is discharged from his duties and all scheduled assets are abandoned to the debtor. In a no-asset case, the final decree is usually entered a few days after the discharge.
  • Final Decree (in an asset case). Time: Anywhere from 12 months to many years. If a Chapter 7 Trustee is administering assets, there are several procedural things that need to happen. The time for filing proofs of claim need to run. That usually takes at least 180 days. The trustee has to liquidate all of the assets. That could take anywhere from a few days to many years, especially if litigation is involved. Then, the trustee has to file a final report (which usually takes about 60 days in our district). If no one objects to the final report, the trustee distributes to claimants. After all checks clear (which could take 60-90 days, the trustee will prepare a final distribution report. That will take another 60 days or so. If no one objects to the distribution report, the final decree will be entered approximately 25 days after the report is filed.
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