The Chapter 7 Bankruptcy Process in Michigan: General Timeline & Basic Steps
The Chapter 7 bankruptcy process typically requires about 4 months from the filing of the petition to the receipt of the discharge. However, this Chapter 7 bankruptcy process can vary greatly depending upon the complexity of the case, whether there are assets being liquidated or surrendered in the Chapter 7, and also depending upon the amount of time it takes the client filing the Chapter 7 to gather the necessary documentation for his or her Michigan bankruptcy attorney prior to filing. Occasionally, there are also reasons why the Chapter 7 might be better left un-filed for a number of months.
The Chapter 7 Bankruptcy Process in Michigan: Pre-Filing Timeframe
The pre-filing Chapter 7 bankruptcy process is often the most time-consuming portion of the process. We, at The Hilla Law Firm, PLLC, generally meet with our clients at least 3 times prior to filing a Chapter 7 or Chapter 13 bankruptcy case. We schedule for you an initial consultation, in which we spend 1-2 hours discussing your circumstances, the legal framework of the Chapter 13 or Chapter 7 bankruptcy process, and applying that framework to your individual circumstances and goals to determine whether either form of bankruptcy is a good fit for you. If it is, once retained by you, we schedule at least one further in-office meeting to collect a significant amount of documentation from you that is necessary to draft a complete and accurate Chapter 7 bankrutpcy petition, and another meeting prior to filing to review the finished petition page-by-page, determine if any last-minute corrections or updates are required, explain in detail what it is you are agreeing to and filing, collect your signatures on the petition where required, and otherwise answer any remaining questions you may have at that point. With your approval and after any last-minute updates are made, we file the petition generally that same day, and you are off-and-running on the "officical" Chapter 7 bankrutpcy process. How long that pre-filing Chapter 7 bankruptcy process takes, thus, is largely up to the client. The Hilla Law Firm, PLLC is experienced in drafting petitions quickly and accurately, and we never leave that job up to unlicensed paralegals or legal assistants, only to our experienced Michigan bankruptcy lawyers. However, we do require the information from you. The sooner the documentation we require is returned and the more completely and accurately it is compiled, the faster we can prepare your Chapter 7 case for filing. For some clients, this pre-filing Chapter 7 bankrutpcy process may take only days; for others, it may take months. Each according to their means and abilities. We work with our clients, however, every step of the way to make this documentation-gathering process as easy and simple as possible.
The Chapter 7 Bankrutpcy Process in Michigan: Post-Filing Timeframe
Once filed, the "typical" Chapter 7 bankruptcy process, as mentioned, takes about 4 months. The basic steps are:
- The Filing of the Chapter 7 petition, putting automatically into place the "automatic stay against collections" that will prevent creditors from suing you, harassing you, garnishing your bank account or tax refunds or wages, and committing other acts that constitute the collection of a debt. These benefits are immediate upon filing.
- 20-40 days after filing, the 341 Meeting of Creditors is held. This is, in a typical Chapter 7, the only hearing you will need to attend. It is not a court hearing in front of a judge but, rather, an administrative hearing in front of a Chapter 7 Trustee and any creditors who wish to appear to ask you questions about your debts and assets while you are "on the record" and sworn in under penalty of perjury. The 341 Meeting is typically about 5-10 minutes only, and rarely do creditors actually appear—unless, here in Michigan, they are attorneys for credit unions from which you have borrowed for a car or other loan.
- Assuming the Trustee is not attempting to liquidate any of your assets or that a creditor or other party is not objecting to the discharge of your debt (an extreme minority of cases), you will receive your discharge about 60 days after the conclusion of the 341 Meeting. The Bankruptcy Code requires that you wait 60 days in order to give the Trustee or creditors time to consider whether they have any basis for contesting your discharge.
- The case is then administratively closed by the Bankruptcy Court. If you are, however, having assets liquidated by the Chapter 7 Trustee, your case may remain open for as long as 1-3 years after you receive your actual discharge.
The Chapter 7 Bankruptcy Process in Michigan: Complicating Factors
As implied above, the Chapter 7 bankruptcy process can be greatly extended by a number of complicating factors. First, there may be a reason why, once we meet initially and you decide to retain The Hilla Law Firm, PLLC, that we decide that it is better to wait to actually file your case for a number of weeks or months. This could be to maximize your eligibility for Chapter 7 bankruptcy as regards the "means test" which determines your eligibility based upon your household income (for instance, if you have just received a substantial one-time wage bonus, this could skew the income average that the means test examines unfavorably. This could also be to engage in other pre-bankruptcy planning as regards your assets in order to best protect them from liquidation by the Chapter 7 Trustee. Second, as noted above, if your case is an "asset" case, meaning that there are assets being liquidated (i.e., sold off for the benefit of your creditors) by the Chapter 7 Trustee, the basic timeline can be drawn out by negotiations between your bankruptcy attorney and the Trustee regarding disposition or settlement of the Trustee's claim against your asset, and/or merely by the time it takes the Trustee to take possession of the asset, find a buyer, and then distribute funds to creditors who are allowed a certain amount of time to file a claim for a portion of the funds with the Trustee. As mentioned, this entire process can take as long as 3 years to unfold. However, provided that there is no "bad faith" in the bankuptcy filing (avoidance of which being the primary reason that The Hilla Law Firm, PLLC requires so much paperwork from you up front!), this will generally not hold up the discharge of your debt—just the closure of your case by the Bankruptcy Court. Finally, if any litigation is undertaken by your attorneys on your behalf or by your creditors in opposition to either your full discharge or the dischargeability of a particular debt, this can also cause your Chapter 7 bankruptcy process to become protracted. "Asset" cases and cases in which litigation occurs are in the minority of Chapter 7 bankruptcy cases. Very likely upwards of 90% of Chapter 7 cases do not take longer than the "typical" 4 months described above, once filed. The attorneys of The Hilla Law Firm, PLLC are experienced in spotting the issues that may complicate a Chapter 7 bankruptcy process and will be able to give you a realistic forecase of what to expect in your particular case at your initial consultation if good information is provided by you at that meeting, and certainly before the case is filed, once the rest of your documentation is provided. Not every Chapter 7 case can be a "no-asset" case in which no assets are liquidated. Sometimes, working something out with the Chapter 7 Trustee will simply be a further cost of the benefit of discharging 100% of your debt that you will undertake. But we will be able, wherever possible and whenever assets and liabilities are properly disclosed to us up-front, be able to tell you what to expect and what the full cost and timeframe of your Chapter 7 bankruptcy process is likely to be after filing. If you are a Michigan resident and are considering filing for bankruptcy, please contact us at (866) 674-2317 or firstname.lastname@example.org to schedule a free, initial consultation.