Chapter 13 Bankruptcy

• The structure of a Chapter 13 bankruptcy case means it will usually last longer than a year. In fact, if you file Chapter 13, you typically want the case to last more than a year, because a shorter Chapter 13 bankruptcy is usually a failed Chapter 13. Under the provisions of Chapter 13, you agree to make payments to your creditors according to the provisions of a court-approved plan. Depending on your income, the court requires your plan to last either 36 months or 60 months. If you fail to make any payments, your plan is in default, and you lose the protection of the courts.
  
  

Chapter 7 Bankruptcy

• Chapter 7 bankruptcy follows a much shorter time line than Chapter 13, primarily because you don't have to follow a payment plan. If you have a simple case and file your petition properly, you can complete a Chapter 7 bankruptcy in as little as three months. Typically, the court issues a bankruptcy discharge about 60 days after your meeting of creditors, which is when you face your bankruptcy trustee and answer any questions he has. Because the court usually schedules the meeting of creditors about a month after you file bankruptcy, your case can close in as few as 90 days. If your Chapter 7 case extends to a year or more, it usually means problems exist with your case.
  
  

Problems With Your Case

• Your Chapter 7 bankruptcy case should require longer than a year to complete only if you file an incorrect or insufficient petition, if you attempt to defraud the court, or if you have numerous assets to administer. For example, if you leave an asset off your bankruptcy schedules and the trustee finds out, he probably will object to a discharge in your case. Because you swore under penalty of perjury that your petition was accurate, the court may view any omission, whether intentional or not, as fraudulent. As a result, your discharge could be postponed or denied. Another delay could arise if you have numerous "nonexempt" assets, which is property you must surrender to the court for liquidation. Although this will not delay your discharge, your case will not close until the trustee sells the appropriate assets and distributes the net sales proceeds to your creditors.
  
  

Duration of Effects

• Even if your bankruptcy case ends in just a few months, you typically must face the consequences for well over a year. Bankruptcy is a black mark on your credit report that hurts your credit score and reduces the likelihood that you can obtain new credit for up to 10 years, in the case of a Chapter 7 bankruptcy, or for seven years with a Chapter 13.