People in need of bankruptcy relief often need support as soon as possible. The decision to file for bankruptcy often comes on the heels of creditors filing a lawsuit. Homes and vehicles are the collateral for the loans used to purchase them, and people are at risk of losing their houses and vehicles if they don’t act promptly to address their financial challenges.
Chapter 13 bankruptcy is accessible to far more people than Chapter 7 proceedings, but the process does take substantially longer. A filer has to complete a lengthy repayment plan. How long must they make payments on their debts before they are eligible for a discharge?
Every repayment plan is unique
The repayment plan in Chapter 13 bankruptcy is not necessarily the product of a formula. Instead, the filer meets with the trustee appointed by the courts and representatives from their creditors. They look over the types of debt that they have, their resources and their income. They then negotiate a repayment plan that allows them to pay down their debts before they are eligible for a discharge.
Chapter 13 plans typically take between three and five years to complete. Filers generally have to make a single monthly payment during that time. They may have to petition the courts to modify the plan if their circumstances change substantially. Thankfully, they do not have to wait until the end of the bankruptcy to benefit from the process. The automatic stay that protects them from collection activity takes effect the same day that they file.
Learning more about Chapter 13 bankruptcy can help people address their financial hardship. The duration of a repayment plan depends on a person’s circumstances but should not last more than five years at the longest.