Timing aspects of bankruptcy proceedings

New York residents contemplating bankruptcy may want to learn more about the timing aspects of a bankruptcy filing, such as the discharge date or how long bankruptcies stay on a credit report. The discharge date is dependent on the type of filing. For a Chapter 7 bankruptcy, which is a liquidation, the discharge date generally occurs about four months after the bankruptcy petition is granted.

A Chapter 13 bankruptcy is not a liquidation but an adjustment of debts and, therefore, the discharge date varies. In this type of filing, the bankruptcy trustee establishes a schedule for repaying some of the debts over a three- to five-year time period. Once that time period ends and the payments have been made according to the schedule, the remaining debts may be discharged. In either case, once the discharge takes place, all of the debtor’s income is available to pay current and future bills such as groceries or rent, rather than a large portion of it going to pay credit card companies or collection agencies.

Chapter 13 and Chapter 7 bankruptcies stay on a person’s credit report for seven and 10 years, respectively. This is from the date of filing, not from the date of discharge. However, the impact on credit scores will diminish with the passing of time.

In order to have their questions fully answered, a person contemplating bankruptcy may want to schedule a conference with an attorney with experience in bankruptcy filings. If a decision is made to move forward with a filing, the attorney could be helpful in filing the petition and representing the debtor during proceedings.

Source: FOX Business, “When is a Bankruptcy Officially Discharged?”, Erica Sandberg, August 04, 2014