How Long Does It Take To Finish A Chapter 7 Bankruptcy Case?

Chapter 7 bankruptcy cases can be completely finished and closed in a relatively short period of time if it is a “no asset case.” This means that the Chapter 7 trustee has determined that all assets owned by the debtor are exempt, and there is nothing for the trustee to sell / administer in the bankruptcy case.

In the Western District of North Carolina, the bankruptcy trustee will usually file a no asset report soon after the creditors meeting if they are satisfied that there is no property to administer. The creditors meeting gives the trustee a chance to question the debtor to make sure all questions they might have about the case are answered, and that they can rely on the information in the petition. The entire process from case filing to Final Decree can take approximately four to six months in a no asset case where no other issues arise. A properly prepared petition is important for this to happen. If mistakes are found on the bankruptcy petition documents, a Chapter 7 trustee may keep the case open if they have to verify information or look into any issues.

If a no asset report is filed, a period of time passes to allow all creditors a chance to review the case and file objections to discharge if they wish. Assuming none are filed, the court can issue a “Discharge” and a “Final Decree” at the same time since all matters in the case have been dealt with.

The Discharge releases the debtor from all legal liability of the dischargeable debts they owed when they filed their case. Before Discharge, there are a few things that are dealt with in cases. If there are reaffirmations or redemptions to file, these should be done before Discharge. The debtor also has to complete their financial management course before a Discharge will be granted. If not taken and filed, the Final Decree will be entered closing the case without giving the debtor the benefit of the Discharge.

Until a Final Decree is issued, the bankruptcy case is not finished. As long as it remains open, the court will retain control over the property that the debtor owned when the case was filed.

If issues arise or there are assets in the case, there is no set answer to when a case will be closed. In cases that have assets, but no issues against the debtor, a Discharge can be entered but the case will remain open until a Final Decree is issued indicating that the Chapter 7 trustee has done everything necessary and is finished with the case.

Since the Discharge is what most debtors are really after, life can go on for most people. However, until the court releases the property that was owned when the case was filed remains property is subject to the bankruptcy estate, even if the property is exempt at the time the case is filed. The estate can be open for many months, or even years, as the Chapter 7 trustee deals with the bankruptcy estate. During that period, property can’t be freely disposed of.

If a case seems to be taking a long time to finish, discuss the situation with your attorney to see what can be done. If a debtor wishes to have property released from the estate, they may discuss with their attorney whether they may file a Motion to Compel the Trustee to Abandon the property. While this will get that property out of the bankruptcy estate for good, it does normally require additional legal fees and court fees to do so. The attorney may also contact the Trustee to try to move the case along, or ask the Court for help.