Bankruptcy is a complex process, but many people in Rockville, Maryland, file to help with certain debts. The case starts with the debtor filing a petition listing all income and assets. How long the case stays open depends on if the debtor meets the requirements and the type of bankruptcy.
Open bankruptcy cases overview
An open bankruptcy case commonly begins as soon as the filer submits the petition and before they receive a discharge. Chapter 7 bankruptcy discharges some unsecured debts, such as medical bills, to pay creditors and requires selling nonexempt assets.
The filer must attend a meeting of creditors 30 days after filing so that creditors can ask the filer questions. Chapter 7 cases usually remain open four to six months, and the filer should get a discharge notice.
Chapter 13 involves making payments to pay some or all of the debt instead of selling property. However, filers need sufficient income to qualify and must at least pay the creditors the asset value. Chapter 13 cases stay open longer because the debtor gets three to five years to pay the debt.
When cases can get reopened
A debtor may think they are in the clear after a discharge, but courts can reopen cases under some circumstances. Courts may reopen cases if the debtor didn’t file certain paperwork or didn’t list nonexempt income received before filing, such as injury settlements. The trustee or creditor can reopen the case if they discover that the filer left out a nonexempt asset.
If a debtor needs to reopen their case for any reason, they must file an ex parte motion detailing the reasons. The debtor may reopen a case to remove a judgment lien, add a creditor or add a debt.
Bankruptcy offers relief, but not all debts can get discharged, such as domestic obligations. Bankruptcy impacts credit for several years, so the consumer may want to seek other options before deciding to file bankruptcy as a last resort.