How long do filers make payments in a Chapter 13 bankruptcy?

On Behalf of | Jul 3, 2024 | Chapter 13 Bankruptcy |

Chapter 13 bankruptcy is one of the most common forms of bankruptcy. People with valuable property or above-average income file for Chapter 13 proceedings because they do not qualify for Chapter 7 bankruptcy. Others may choose a Chapter 13 filing because they want to avoid any requirement to liquidate property.

Chapter 13 bankruptcy takes longer than Chapter 7 bankruptcy to complete. The reason is simple. A filer must commit to a lengthy repayment plan before the courts potentially discharge their remaining debts.

How long does a Chapter 13 repayment plan typically last?

Every bankruptcy case is unique

Some Chapter 13 bankruptcies are significantly faster than others. How long the process requires depends in no small part on the arrangements the filer negotiates with creditors. There is a creditor meeting early in the bankruptcy process where the filer proposes a repayment plan. The trustee appointed by the courts to oversee the bankruptcy and the representatives of various creditors meet with the filer to discuss their proposed repayment plan.

Depending on how much debt someone has and their current level of income, the plan can involve vastly different monthly payment amounts. How long someone makes payments can also vary from case to case. The shortest amount of time for a repayment arrangement in a Chapter 13 filing is three years or 36 monthly payments. However, the courts can order someone to make payments for longer if they have a substantial amount of debt or there are other complicating factors. The repayment plan could potentially last for up to five years.

The filer has to commit the vast majority of their disposable income toward payments. After they complete the repayment plan, they can potentially request a discharge of what remains of their debts. In scenarios where an individual’s economic circumstances change substantially during that repayment period, they may need to modify or adjust their payment arrangements. Given how long the repayment plan lasts, negotiating sustainable terms is of the utmost importance for someone in need of the relief offered by bankruptcy.

Proposing reasonable terms for a repayment plan can help someone who hopes to secure a discharge through a Chapter 13 bankruptcy filing. People who understand the basics of the bankruptcy process can use that information to make decisions and set expectations as they navigate the complicated legal system.


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