The question “How long does bankruptcy last?” can refer to more than one aspect of the bankruptcy process and depends on what type of bankruptcy a debtor is filing. Though there are five separate types of bankruptcy proceedings, people are usually referring to Chapter 7 or Chapter 13 when they talk about bankruptcy.
Chapter 7 bankruptcy refers to a debtor’s option to “discharge” his debts and start anew. Many, but not all, debts can be discharged and some assets may be at risk. Typically, large assets, such as your home or car, may be exempt from the bankruptcy but you must continue to make payments on those items. Most personal items can also be retained. School loans may be discharged under some conditions but that typically requires special circumstances.
The process for completing a Chapter 7 bankruptcy lasts approximately 90 days and includes a short meeting with creditors approximately 30 days after filing. Typically, creditors do not actually attend. The meeting is facilitated by your bankruptcy trustee (usually an attorney) and is not held in court though you will be sworn in. In the 60 days following the meeting, your assets will be evaluated and creditors will be given an opportunity to object to your filing. If all goes well, the proceedings will be complete by the end of those 60 days.
A Chapter 7 bankruptcy filing will continue to appear on your credit report for 10 years.
A Chapter 13 bankruptcy differs from Chapter 7 in that debts are not discharged. The debtor is given an opportunity to repay debts over a three- to five-year plan. People with a large number of valuable assets may prefer this option in order to avoid selling or losing assets and because it is somewhat less damaging to their credit rating. In some cases, Chapter 13 bankruptcy is the only option available to a debtor.
A Chapter 13 bankruptcy lasts on your credit reports for 7 years.