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Chapter 7 Bankruptcy Process

Chapter 7 bankruptcy can be initiated either voluntarily (filed by debtor) or involuntarily (filed by creditor). Once a petition is filed in the appropriate Bankruptcy Court, most collection actions against the debtor are automatically stayed (stopped). A trustee is then appointed to supervise the bankruptcy proceeding. One to two months after filing, a meeting of the creditors is held to determine eligibility and meet with the debtor to ensure the debtor wants to go through with the proceeding. If a debtor qualifies for Chapter 7, the trustee assembles and liquidates the debtor’s non-exempt property. In most Chapter 7 cases, there is no non-exempt property to assemble and liquidate. Whatever assets that the trustee can obtain from the sale of non-exempt property is used to pay creditors. The debtor must complete an approved debtor education course within 45 days of the meeting of the creditors. The debtor will usually be discharged from most, if not all debts relatively soon after filing (as early as 3 months) so long as a interested party does not file an objection to discharge.

How long does the bankruptcy process take before debts are discharged?

For Chapter 7 bankruptcy, debts may be discharged in as little as 3 months. The court must approve of discharge during a hearing that takes place sometime after filing. If motions objecting to discharge are not filed, the court will discharge the debtor from all unsecured debts.

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