A mandatory repayment plan is one of the main differences between a Chapter 13 bankruptcy and a Chapter 7 case. Individuals pursuing Chapter 13 bankruptcy have to pay down their eligible debts before they can discharge the remaining balance.
A Chapter 13 bankruptcy repayment plan requires the commitment of the vast majority of an individual’s disposable income in most cases. They must provide information about their income and expenses. From there, they negotiate with creditors and the trustee appointed by the courts to establish a reasonable plan. They make monthly payments to reduce the total amount owed to their creditors.
How long do filers generally need to make payments before they become eligible for a discharge in a Chapter 13 case?
Repayment plans last for years
As mentioned above, each repayment plan requires a meeting with creditors and the court-appointed trustee. The final terms set depend on the nature and amount of the debts accrued, as well as the financial circumstances of the filer.
In some cases, the repayment plan may only last for three years. Other times, the repayment plan may be longer. The maximum duration for the payment plan is typically five years in a Chapter 13 bankruptcy case. A lot can change in three to five years, and filers may sometimes need to modify their plans if their income drops or other financial details change during the bankruptcy.
Having support when pursuing a Chapter 13 bankruptcy makes it easier for a filer to secure reasonable terms and manage any complications that arise. Filers who complete their repayment plans can discharge their eligible remaining debts and then begin rebuilding after their bankruptcy is complete.