The length of your bankruptcy case will depend on what type of bankruptcy you file, and the type of bankruptcy you file will depend on your income and asset situation. There are four different types of bankruptcy: Chapters 7 (Liquidation), Chapter 11 (Reorganization/Rehabilitation), Chapter 12 (Family Farmer), or Chapter 13 (Individual Reorganization). Individual debtors are eligible for relief under all Chapters of bankruptcy, whereas corporate debtors are ineligible for relief under Chapter 13.
Types of bankruptcies and their length
Personal bankruptcy
In general, a debtor who files Chapter 7 bankruptcy will typically receive a discharge (forgiveness of pre-petition debts) within three to six months from date of filing. If the debtor has non-exempt assets, it could take up to a year or longer for the bankruptcy trustee to administer the estate. Chapter 11, 12, and 13 bankruptcy cases will take quite a bit longer, typically between three to five years from the date of plan confirmation, because the debtor is making payments to satisfy all or or portion of the unsecured debt through a plan of reorganization. A personal bankruptcy could extend longer if there are objections to exemptions or discharge, but a bankruptcy attorney should be able in most cases to gauge this possibility prior to filing. Pursuit of fraudulent transfers or preferential payments could also drag-out the closure of the case.
Corporate bankruptcy
Corporate debtors typically have a larger quantity of assets and debts than individual debtors, so corporate bankruptcies will almost always last longer than individiual ones. There is often quite a bit of pre-bankruptcy planning that precedes the fling of a corporate case, but even with this pre-filing due diligence, corporate cases will always take longer to conclude.
The time investment can be well worth it
The decision whether to file bankruptcy is always a difficult one, but it could be the life preserver you desperately need to prevent from drowning in a sea of debt. A bankruptcy lawyer can give you an estimate of how long your bankruptcy case will last and help you decide whether or not it is the right option for you.
