Most no-asset Chapter 7 bankruptcy cases are completed within four to six months after filing the bankruptcy petition. That means you can get rid of debts you cannot pay in just six months with a bankruptcy discharge. A no-asset case means that you do not have any property the Chapter 7 trustee seizes to sell.
Most Chapter 7 cases filed are no-asset cases. Bankruptcy exemptions protect the equity in specific assets. You can learn more about bankruptcy exemptions and how they apply in your case here.
It’s also important to realize that there are some alternatives to Chapter 7 bankruptcy that may be useful to consider . If you don’t qualify for Chapter 7 bankruptcy, Chapter 13 bankruptcy may be a better option for you. If you think you can’t take care of all your debts in a traditional bankruptcy, you may also want to consider looking into debt settlement. Regardless of what you decide to do, make sure you are well-informed before moving forward.
This article discusses the average timeline for a no-asset Chapter 7 bankruptcy discharge. While each case is different and each jurisdiction varies, the average timeline for a Chapter 7 bankruptcy discharge is:
Take the Chapter 7 Means Test
You must meet income qualifications to receive a bankruptcy discharge under Chapter 7. A bankruptcy discharge means that you no longer have a legal liability to repay a debt. If you do not meet the income qualifications for a Chapter 7 bankruptcy, you may choose to file under Chapter 13 to get rid of debts through a court-monitored repayment plan.
If you are interested in filing Chapter 7, try our Chapter 7 bankruptcy Mean Test calculator to estimate whether you qualify for a Chapter 7 bankruptcy. Should you qualify, we suggest completing the Chapter 7 Statement of Your Current Monthly Income before completing the bankruptcy forms to ensure you qualify to file under Chapter 7.
If you “fail” the test because your income is higher than the average median income for your state, you must complete the Chapter 7 Means Test Calculation. However, you may still qualify for Chapter 7 if your disposable income (the money left over every month after paying allowed living expenses) is below a specific amount.
Filing the Chapter 7 Bankruptcy Petition
If you pass the Chapter 7 Mean Test, your Chapter 7 bankruptcy case begins by filing a Chapter 7 bankruptcy petition, schedules, and statements. With your Chapter 7 petition, you must pay the filing fee and file the Certification of Completion for your Credit Counseling Course.
The Credit Counseling Course is the first bankruptcy course you must complete to receive a bankruptcy discharge. It takes about 90 minutes to two hours to complete online. You do this before you file your Chapter 7 petition. You must choose a provider that the US Trustees Office has approved.
If you hire a bankruptcy lawyer, your lawyer prepares and files all documents online for your Chapter 7 case. However, if you file Chapter 7 without a lawyer, you are responsible for completing and filing the bankruptcy forms. Official bankruptcy forms are available for free on the website for the United States Courts.
You may also use Ascend’s program to prepare Chapter 7 bankruptcy forms. It is an easy-to-use program that walks you through preparing your Chapter 7 bankruptcy forms. Contact us now to discuss this program and how it can help you file Chapter 7 without an attorney.
NOTE: You can sign up to receive an email each time a document is filed in your bankruptcy case instead of receiving notices by mail through the Debtor Electronic Bankruptcy Noticing system. It does not cost anything to use the system.
Complete Your Debtor Education Course
The second bankruptcy course must be completed before you receive your bankruptcy discharge. Therefore, it is best to complete this course before attending the bankruptcy hearing to avoid missing any deadlines.
If you do not complete your second bankruptcy court AND file the Certificate of Completion with the bankruptcy court, you cannot receive a discharge. In other words, it is as if you never filed for bankruptcy. As a result, you still owe all your debts, and your creditors can take legal action to collect the debt.
Most companies offer both bankruptcy courses to make it easier for you to complete the second course. The Debtor Education Course takes about two hours to complete online. File the Certificate of Completion for the second bankruptcy course with the bankruptcy court.
Send Documents to the Chapter 7 Trustee
The bankruptcy court schedules your bankruptcy hearing within 20 to 40 days after filing your bankruptcy case. After filing your bankruptcy case, the court sends a notice to you and all interested parties. The notice includes the name and address of the Chapter 7 Trustee assigned to your case. It also includes the date, time, and address for your 341 Hearing.
Before attending your hearing, you must send documents to the Chapter 7 trustee assigned to your case. Each Chapter 7 trustee has procedures for this process. Typically, the Chapter 7 trustee must receive copies of your tax returns for two years before filing bankruptcy. In addition, some trustees request copies of other documents. Contact the Chapter 7 trustee’s office as soon as you receive the notice to ask for a list of documents required and how to submit those documents.
Attend the 341 First Meeting of Creditors
Attend your 341 First Meeting of Creditors. The Chapter 7 trustee assigned to your case conducts the hearing. Creditors rarely appear at the hearing, but they can appear to ask you questions about the debt you owe.
At the hearing, the Chapter 7 trustee verifies your identity. You need to have your original driver’s license and Social Security card. Generally, you can obtain verification of your Social Security Number from the Social Security Administration’s office in person. If you do not have these documents, contact the Chapter 7 trustee’s office immediately to inquire about other documentation that might be acceptable to verify identity.
The hearing takes about ten minutes. The trustee asks questions about your bankruptcy case after placing you under oath. If you arrive at the hearing about 30 minutes before your hearing time, you can watch several hearings to get an idea of the questions the trustee asks each debtor.
Wait for Your Bankruptcy Discharge
If you completed your Debtor Education Course and filed the Certificate of Completion, all you need to do is wait for your bankruptcy discharge. In no-asset Chapter 7 cases, the court generally issues the bankruptcy discharge and closes the Chapter 7 case within 30 to 60 days after your bankruptcy hearing, unless a creditor or the trustee objects to the discharge.
Taking Advantage of Your Chapter 7 Bankruptcy Discharge
After receiving your bankruptcy discharge, you can begin to rebuild your credit. The Chapter 7 bankruptcy case gives you a fresh start. Take advantage of your fresh start by using the information you learned during your bankruptcy courses to keep your finances on track.
Get Help Filing Your Chapter 7 Bankruptcy Case
Most Chapter 7 bankruptcy cases are simple, no-asset cases. However, there could be complications if you have substantial equity in your property, sold or transferred property recently, or paid off debts to family members or friends within the past two years. If so, you may want to speak with a Chapter 7 bankruptcy lawyer.
We can help you locate a Chapter 7 bankruptcy attorney near you who offers free bankruptcy consultations. If you want to proceed with a Chapter 7 bankruptcy filing without a lawyer, you may want to use our bankruptcy program to prepare your forms. Contact us to discuss how Ascend can help you with a Chapter 7 bankruptcy filing.