12th Jan 2015
Personal bankruptcy filings fall under two categories: Chapter 7 and Chapter 13. When you are considering filing for bankruptcy, it is important to understand the differences between the two and the timelines associated with each. The primary difference between the two chapters is whether you have a significant amount of spending money left over after bills are paid. Chapter 7 essentially dissolves credit card and other unsecured debt if you do not have enough income to live on. Basically, the timeframe for both of these filings varies on your individual circumstances.
Chapter 7 vs 13
While both variations of personal bankruptcy involve are dissolution of debts, Chapter 13 is more of a debt consolidation since it applies to wage earners who still have available funds after paying all living expenses. Whereas Chapter 7 filings will most likely dissolve all debt, a Chapter 13 filing will involve a court mandate to pay all disposable income to a bankruptcy trustee, who will pay your creditors a monthly amount equal to the amount of money you have after meeting ordinary living expenses. The length of time this process takes varies by your individual situation, with the average filing and completion taking around 3 months.
Case by Case
The time you spend filing and awaiting completion of the bankruptcy process also depends on your level of preparation in your collection and organization of the necessary paperwork for the process. Review the Means Test and begin organizing required documents early to save time, money, and potential complications later on from not having the necessary information available when it is requested. Bankruptcy is never an easy process to go through, but you can make it more efficient by becoming as prepared and informed as you can for the specific category of bankruptcy you’re filing.