In July 2013, the City of Detroit filed for bankruptcy protection under Chapter 9; it was the largest such filing in the country’s history. Although emergency manager Kevin Orr had hoped that the process would wrap up quickly, the case has dragged on amid numerous objections from creditors. Mr. Orr hopes that the case will be over by October 15.
That date is just a few weeks after Mr. Orr’s 18-month term is set to expire.
The bankruptcy process
A personal bankruptcy under Chapter 7 does not take nearly as long as a much larger Chapter 9 or Chapter 11 proceeding. The debts involved are usually not nearly as complicated, there are few if any third parties interested in the process and the amount involved is minuscule compared to a municipal or business bankruptcy. In fact, the vast majority of debtors never have to go to court at all.
In a Chapter 7, there is a meeting with the bankruptcy trustee about four to six weeks after the petition is filed. The trustee’s main job is to examine the paperwork and ensure that there are no red flags. About four to six months later, most or all of your unsecured debts will be discharged.
In a Chapter 13, the trustee examines your petition and ensures your debt repayment plan disposable income is paid to the Trustee to distribute to your creditors for either three or five years. At the end of that time, any remaining unsecured debts are discharged.
Contact us for a free consultation with attorneys who understand the entire bankruptcy process.