hourglass representing how long the bankruptcy process takes

When you are in debt, whether from poor financial decisions you made when you were young or emergency medical bills, understanding your options is essential. One of the most common options for many to discharge debt is to file for bankruptcy. If you’ve considered this option, you may not know how long the bankruptcy process will take or if it will stay on your credit report. The following blog explores what you must know about the length of this process and how a Memphis, TN consumer bankruptcy lawyer can help you through this procedure.

What Factors Influence the Length of the Bankruptcy Process?

In general, the process of filing Chapter 7 or Chapter 13 bankruptcy takes around three to six months, regardless of which choice you file. However, the actual process of discharging debt is significantly longer for Chapter 13. This is because Chapter 7 bankruptcy is a more immediate elimination of unsecured debt, meaning it will not be a long process, while Chapter 13 involves creating a repayment plan. Depending on the terms of your repayment plan, Chapter 13 may last anywhere from three to five years.

However, the filing process for bankruptcy may take longer depending on how quickly each party responds and whether or not creditors have any objections. As previously mentioned, this process can take up to six months. In Chapter 7 bankruptcy, once this process is completed, your bankruptcy case is officially over, as there is no repayment plan.

It is also critical to understand that bankruptcy can have lasting impacts on your credit for years. Filing Chapter 7 bankruptcy will remain on your credit report for ten years, while Chapter 13 will affect your credit for 7.

How Do I Know Which Choice Is Best for Me?

Which bankruptcy option is right for you depends on many different factors. For example, to file Chapter 7, you must qualify via a “means test,” which determines your disposable income after paying off mortgages, taxes, and other expenses. Generally, your gross income must be lower than the median income for families of your size in Tennessee to qualify.

Those who don’t qualify for Chapter 7 can likely file for Chapter 13. One of the significant benefits of Chapter 13 is that it allows you to catch up on certain debts through the repayment plan while still discharging debts. However, you must be committed to the repayment plan. If you miss a payment, it will hurt your case, and the courts may dismiss your case or turn it into a Chapter 7 bankruptcy. This action allows them to liquidate your non-exempt assets.

Bankruptcy can be a stressful and confusing process, making the need for an experienced bankruptcy lawyer all the more necessary. When considering this option, an attorney can guide you through the process and help you determine the best course of action for your circumstances. When you need help, the Arnold Law Firm is here to help. Contact us today to learn more about how we can assist you.