Individuals struggling with unsustainable levels of debt might eventually decide to file for bankruptcy. They then have to choose the type of bankruptcy they pursue based on their income levels, the type of debt they have and the assets they may own.
For those with average or better income or substantial personal property, Chapter 13 bankruptcy might be the best option available. It can also be a useful resource for those hoping to rework their secured debts, such as car loans or mortgages.
Chapter 13 bankruptcy does typically take longer than Chapter 7 bankruptcy to complete. How long does the filer have to wait for a discharge in a Chapter 13 bankruptcy case?
Discharge comes after the repayment plan
The reason a Chapter 13 bankruptcy takes much longer to complete than a Chapter 7 bankruptcy is the obligation to make payments toward the debts. Specifically, the filer has to establish a repayment plan by working with the court-appointed trustee and representatives from certain creditors.
They make one monthly payment to the courts, and the trustee distributes the funds to the different creditors. Typically, the repayment plan lasts a minimum of three years. However, it can last as long as five years in some cases.
It is only after the filer completes the repayment plan that they can request a final hearing in front of the judge and pursue the discharge of what they still owe on their eligible unsecured debts. Most Chapter 13 bankruptcy cases take at least three-and-a-half years to complete – if not a bit more than five years.
Learning about the rules for different types of bankruptcy can help people choose the best solution given their circumstances. Chapter 13 bankruptcies can provide immediate financial relief and may lead to the discharge of certain debts after the end of the repayment plan.
