Chapter 13 bankruptcy is often the best solution available to those experiencing temporary financial hardship. In a Chapter 13 bankruptcy case, people can restructure some of their financial obligations. They can prevent foreclosure, vehicle repossession and creditor lawsuits.
They can also discharge some of their eligible debts. Unlike a Chapter 7 bankruptcy, Chapter 13 bankruptcy does not require that a filer pass a means test. The filer also gets to avoid the liquidation of their assets. Instead, they focus on addressing their debts by negotiating a repayment plan in good faith and then making regular payments through the courts.
The automatic stay that protects people from collection activity and the ability to renegotiate debts are both key benefits of a Chapter 13 bankruptcy. Many people seeking a Chapter 13 bankruptcy are also eager to secure a discharge of some of their debts. How long does it typically take to obtain a discharge in a Chapter 13 bankruptcy case?
Discharge comes after the repayment plan
The timeline for Chapter 13 bankruptcy is substantially longer than the timeline for a Chapter 7 filing. People who qualify for Chapter 7 bankruptcy can become eligible for discharge within a few months of filing their initial paperwork.
In Chapter 13 cases, discharge only occurs after the filer completes their repayment plan. The exact terms of the repayment plan depend on the overall amount of debt that they carry and the types of debt, as well as other factors that come up during their creditor meeting.
Most Chapter 13 filers must make between three and five years of payments. They can then discharge what remains of certain eligible debts after they complete that process. The discharge is not automatic or instantaneous.
Instead, the filer typically needs to wait between six and eight weeks after submitting their last payment for the courts to finalize their bankruptcy and approve their discharge. The courts have to review the case and ensure that the filer qualifies for discharge after fulfilling their repayment obligations.
Careful adherence to the terms of a repayment plan can help Chapter 13 bankruptcy filers get the debt relief that they require. Learning more about the process can help people know what to expect when they pursue a Chapter 13 bankruptcy.