The length of time it takes to settle a bankruptcy case depends on where you file your case, the type of case you file, whether there is fraud in your case and when you consider a case to be over. Generally, most Chapter 7 bankruptcies last a few months, while Chapter 13 bankruptcies last a few years. However, many variables can affect the ultimate resolution of any case.
Discharge Vs. Closing
Two important dates in all bankruptcy cases are the discharge date and the closing date. Depending on your perspective, either date can be considered to be the "settling" of a bankruptcy case. The bankruptcy discharge settles your obligation as a debtor to pay your debts, and the closing date settles the administrative details of the case. In most cases, the discharge date ends your responsibilities as a debtor, and the court will close your case shortly thereafter. However, if you have assets for the court to administer in a Chapter 7 case, your actual closing date may come much later.
Chapter 7 Process
As soon as you file a Chapter 7 case, the court begins to administer your assets. You may not ever come into contact with any court officials, but technically the court has jurisdiction over all of your property until your case closes. The court takes legal control of your property because it may have to sell some of your assets to benefit your creditors. However, since all states allow debtors to keep at least some property, most Chapter 7 cases end up being "no-asset" cases, meaning the court returns legal ownership of all property to the debtor, with none being sold for creditors. No-asset debtors typically receive a discharge and a case closure within three to six months after filing. For an asset case in which the court has to physically sell some property, the case will not close until all liquidations are complete.
Chapter 13 Process
The discharge and closing of a Chapter 13 case usually follow in rapid succession, since there are no assets for a bankruptcy trustee to administer. Chapter 13 bankruptcy does not require the liquidation of any debtor assets, so all Chapter 13 cases are essentially "no-asset" cases. Unfortunately, most Chapter 13 bankruptcies still last three to five years, since the court requires you to pay off your debts through a monthly payment plan. The length of this plan depends on your annual income at the time you filed your petition. Higher-income filers have to complete the 60-month plan, while lower-income debtors might be able to file a 36-month plan.
Fraud and Objections
Bankruptcy law stipulates that Chapter 7 debtors should receive a discharge 60 days after the meeting of creditors, which is a mandatory meeting with a bankruptcy trustee. However, creditors and the trustee have the opportunity to hold up the discharge by filing objections, typically for fraud. For example, if you hid assets from the court or took out numerous cash advances right before filing for bankruptcy, the court may delay or even deny your discharge.
