Chapter 7 bankruptcy is the fastest path to discharge available. However, not everyone actually qualifies for Chapter 7 bankruptcy. Some people have high enough income that they cannot pass the means test. For others, the inability to exempt all of their property makes a Chapter 13 bankruptcy the better option.
Chapter 13 bankruptcy takes much longer than a Chapter 7 filing. Instead of a process that people can complete in under six months in some cases, Chapter 13 filers should anticipate waiting multiple years to be eligible for discharge. They must complete a lengthy repayment plan before the courts agree to discharge any remaining balances on their eligible debts. How long do those payments typically last?
Each repayment plan is unique
There is no set formula for determining how long a Chapter 13 repayment plan should last. The federal rules governing Chapter 13 bankruptcy allow for anywhere from three to five years of structured payments.
Filers negotiate the terms of repayment plans at a meeting overseen by the court-appointed trustee and attended by creditor representatives. How long payments last and how much a filer pays depends on their overall debt level, the nature of the debts and their current finances. There is often an expectation that people should allocate the majority of their disposable income to their Chapter 13 payment plans.
People preparing for Chapter 13 bankruptcy may need help evaluating their finances and preparing to propose a specific repayment plan. Partnering with a Chapter 13 bankruptcy attorney can make it easier for those concerned about adhering to a repayment plan to pursue terms that are sustainable.
