Timing of bankruptcy discharges varies depending on the chapter under which a case was filed. In Chapter 7 cases, courts typically grant discharges promptly on expiration of times fixed for filing complaints objecting to discharges and the time fixed for filing a motion to dismiss the case for substantial abuse, usually about four months after the date a person files a petition with the clerk of the bankruptcy court.
In Chapter 13 cases, the court will grant a discharge as soon as practicable after a person completes all payments under their repayment plan. Because a Chapter 13 plan provides for payments to be made over three to five years, a discharge often occurs around four years after the date of a filing.
Steps Before the Discharge
A Chapter 7 or Chapter 13 case will begin with a person filing their formal paperwork with a local court. A person needs to submit all documents relating to their income, expenses, debts, assets, financial transactions, and any property they are allowed to exempt.
The next step will usually be attending the 341 meeting of creditors hearing, which is often held within 20 to 40 days of the initial filing. At a 341 meeting of creditors hearing, a bankruptcy trustee places a person under oath and asks them some questions, and creditors are also given the opportunity to ask questions although not many do.
When a trustee needs additional information, the hearing could be continued to another date. All creditors will have 30 days after a hearing concludes to object to the discharge or a particular debt or the entire case in general.
There are two important requirements to all bankruptcy cases, as people must participate in an approved credit counseling course prior to filing for bankruptcy and also take a class on personal financial management. The United States Department of Justice offers a list of approved credit counseling agencies.
Credit counseling agencies may charge fees for their services, but when people cannot afford fees, counseling agencies are required to provide services free or at reduced rates by offering a sliding fee scale. They must also offer fee waivers for people below certain income levels, usually 150 percent of the poverty level for a family of equal size.
After pre-bankruptcy credit counseling, a person must undergo pre-discharge debtor education. People must complete this class within 60 days of the first date set for the 341 meeting of creditors.
If everything goes smoothly, a person will receive their bankruptcy discharge about 60 days after their 341 meeting of creditors hearing. A case is not officially closed until a court resolves all outstanding matters and issues a final decree, dismissing the case.
Reasons for Delays
There can be a number of possible issues that could arise and complicate a bankruptcy case. The delays these issues cause can range from being relatively minor to much more complex and time-consuming.
Shorter delays often involve requests for information from a debtor that can be resolved quickly. In such cases when people are able to provide needed information quickly, then their case will not suffer from much of a delay at all.
When there are issues concerning the property a person possesses, it can be more difficult to reach a resolution. Depending on whether a person will need to relinquish or sell property, it is possible that a property issue could delay a case several months.
When there is any question about whether a person should receive a discharge, then the case could be headed to litigation because of a bankruptcy lawsuit. These cases are likely to see delays of several months or maybe even years.
When trustees need additional information about cases, it can cause the 341 meeting of creditors to be rescheduled and may push back other deadlines as well. When people can provide requested information quickly, it can help minimize delays in these cases.
Creditors may object to discharges and could also allege fraud in some cases. When creditors are disputing discharges, it often creates delays.
If a trustee needs to sell some of a person’s property, that can also delay a case because the trustee needs to be able to sell the property, distribute the funds to creditors, and submit a final report to the court. All of these steps will take time that can delay a case.
Exceptions to Discharges
Section 523(a) of the United States Bankruptcy Code lists the kinds of debts that cannot be discharged in bankruptcy. Examples include:
- Domestic obligations such as child support and alimony
- Court costs
- Fines, penalties, and restitution stemming from criminal activities
- Certain taxes
- Debts associated with driving under the influence (DUI) offenses
- Condo or other homeowners’ association fees are imposed after a person files for bankruptcy
- Retirement plan loans
- Debts not discharged in a previous bankruptcy
- Debts not listed on a bankruptcy petition
It should also be noted that student loans are rarely dischargeable in a bankruptcy case. A person hoping to discharge student loans will have to prove an undue hardship is being placed on them by being required to repay the loans, and it is incredibly difficult for a person to compel a court to discharge student loans.
United States Bankruptcy Court statistics show that there were 18,614 Chapter 7 cases and 14,359 Chapter 13 cases filed in December 2022. Statistics for the full year show that 387,721 cases were filed in 2022, 453,292 were terminated, and 662,934 remained pending.
Contact Our Arizona Bankruptcy Law Firm
If you are hoping to file for Chapter 7 or Chapter 13 bankruptcy but have concerns about how long it will take you to get your discharge, you will want to make sure you have legal representation working with you so you can be confident that you are handling everything as expeditiously as possible. DebtBusters helps families all over Arizona get the financial relief they need and deserve by working closely with people and ensuring that paperwork is perfectly complete so there are no hang-ups with the court.
Our firm tries our hardest to simplify the bankruptcy process so we end up doing all of the work and you just sit back and wait to receive your discharge. You can call (866) 223-4395 or contact us online to arrange a free consultation with our Arizona bankruptcy law firm.
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