Most folks who've interacted with the American legal system will come away with the impression it moves very slowly. Talk with a bankruptcy attorney, though, and you might hear something quite different. This article explores how quickly bankruptcy tends to move, when it might go slowly, and what some intervening factors may be.
Bankruptcy Is Usually Fast
Speaking in the broadest sense, a bankruptcy lawyer will tell you the process is almost always fairly speedy. That's at least relative to how most of the rest of the legal system operates. Chapter 7 for individuals tends to be the fastest of the possible scenarios. The court liquidates your non-exempt assets, divides the proceeds equitably among your creditors, and discharges the remaining unsecured debts. This process rarely takes more than a couple of months once you officially file.
Restructuring under Chapter 11 or 13 tends to be a little more involved but not radically so. You'll have to provide proof of your ability to pay according to a schedule. That could take a little bit longer, especially if the petitioner is a business and creditors aren't happy with a Chapter 11 plan. For individuals filing Chapter 13, though, the longest part is usually making payments. That's normally a three-year plan, but a few cases go as high as five years.
The biggest potential speed bump is if the judge rules you filed the wrong type of bankruptcy. This is a big reason to pay for professional bankruptcy attorney services. If you're not eligible for Chapter 13, for example, you'd rather know that early to save time and filing fees.
Another possible slowdown is if creditors question your filing. This is fairly rare, and it usually happens if someone suspects a petitioner is filing a fraudulent case. The most common reason is if a creditor thinks the petitioner is hiding assets. Once more, the best solution is to hire a bankruptcy attorney and make sure the petition for relief is airtight.
Okay, you and your bankruptcy lawyer have filed a solid case. What else could go wrong? The biggest remaining possibility is a court backlog. Natural disasters, pandemics, and national emergencies sometimes delay court proceedings.
Complex cases sometimes cause delays. For example, an individual with significant assets and liabilities might file Chapter 11. That creates a process where creditors can propose a competing plan to the one the petitioner filed. The judge then has to evaluate the plans and determine which one is the most practicable and will protect the creditors' rights.
Reach out to a bankruptcy attorney about your specific case.Share