If you've gotten in over your head with credit cards or other debts, filing bankruptcy may be the only way to get back on your feet financially. Personal bankruptcy cases are filed under Chapter 7 or Chapter 13, depending on your individual situation. The length of time involved in eliminating your debts generally depends on which type of bankruptcy you file.
Chapter 7 Discharge
When you file a Chapter 7 bankruptcy case, the court is required to schedule a 341 hearing within 21 to 40 days. At the hearing, the bankruptcy trustee assigned to your case will ask you questions about your filing and your creditors also have the option of appearing. Following the 341 hearing, your creditors have 60 days to file a complaint objecting to discharge or to file a motion to dismiss. Once the 60-day window ends, the court can move to grant your discharge. Typically, a discharge in a Chapter 7 case is granted approximately four months after the date of your initial filing.
Chapter 13 Discharge
In a Chapter 13 bankruptcy, you agree to repay some or all of your outstanding debts over a specific period of time. The repayment period typically lasts either three or five years and is based on your income. Once you've completed all of your plan payments, you're eligible to receive a discharge. You must be able to show that any outstanding domestic support obligations have been paid and that you've completed all of the debtor education requirements. A Chapter 13 discharge may be granted before the repayment period ends if you can prove that you've experienced an undue and sustained financial hardship that prevents you from making the payments.
Denial of Discharge
The federal bankruptcy code allows a Chapter 7 or Chapter 13 case to be dismissed without a discharge in certain instances. For example, the court may deny a discharge if you fail to produce all of the required documentation, such as tax records. A Chapter 7 or Chapter 13 discharge can also be denied if you fail to participate in the required financial management course. If one or more of your creditors challenges your filing or the trustee determines that you lied or committed fraud at any point during your bankruptcy filing, you may be denied a discharge.
Certain types of debt may not be discharged through Chapter 7 or Chapter 13 bankruptcy, which means you'll still be responsible for them after your case is resolved. Examples of non-dischargeable debts include back child support or alimony payments, certain taxes, fines or penalties owed to government agencies, criminal restitution, court fines and penalties, homeowners' association or co-op fees, debts stemming from a personal injury judgment, debts that were incurred fraudulently and any debts that were not listed in your initial petition. Student loans are generally not dischargeable unless you can prove a significant and long-lasting financial hardship that makes it impossible for you to repay them.
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