Most of my clients have one thing in common: They have almost all put off bankruptcy until there was absolutely nothing else left to try. Bankruptcy was the last thing on their “get out of debt” list, and even when everything else had failed, they still spent months stressing and struggling to find something else besides bankruptcy to fix their problems.
When folks finally do come to my office and we talk through the timeline of a bankruptcy case, they are frequently surprised to learn how quickly a chapter 7 bankruptcy can be prepared, filed and finished. In most cases, the life of the case from filing to discharge (debts are wiped out) is a little over three months.
But here’s another little piece of information that people often don’t realize: When you get your discharge order from the bankruptcy judge and all your debts that can be wiped out have been wiped out, the discharge order actually relates back to the day your filed your case. In other words, if you file a chapter 7 bankruptcy in Oakland Bankruptcy Court on January 2, 2013, and then get your discharge order around April 10, 2013, the order says your debts are wiped out as of the original filing date, January 2nd.
The bankruptcy system is pretty slick in this one area. As you probably know, when you file your case, you are immediately protected by the automatic stay. This means generally that your creditors can’t do anything to collect on the debts you owe. It also means that you don’t have to pay your bills while your waiting for your case to finish up. The automatic stay usually lasts up until the day you get your discharge order at which point you no longer need it because the discharge order says your debts are gone.
What it all comes down to is that for most debtors filing for chapter 7 bankruptcy, that filing date is the last time they need to worry about their creditors calling or suing or otherwise bothering them over a debt. This is why filing sooner in 2013 is probably better than filing later. There are of course some other considerations that come into play like taxes (bankruptcy is actually pretty complicated), so you should consult with an experienced bankruptcy attorney about the proper time to file.
