Does a Chapter 13 repayment plan last a long time?

Does a Chapter 13 repayment plan last a long time?

| Jan 21, 2021 | Firm News

Filing for Chapter 13 can do a lot to alleviate your debt situation. A bankruptcy judge can stop creditors from harassing you. And by going through Chapter 13, you do not have to worry about liquidating your assets. Instead, you will compose a plan to repay your creditors over a period of time.

Still, you may worry about how long you will have to spend paying off your debts. You may hope to finish your bankruptcy as soon as possible. Information from the U.S. Courts website may help you to understand whether your Chapter 13 repayment plan will last long or not.

Duration of Chapter 13 repayment plans

The length of time you will spend repaying creditors will depend on certain factors. If your current monthly income falls below the applicable state median, the court will grant you a period of three years for repayment, only extending the time “for cause.” Conversely, a judge will probably give you five years if your income exceeds the applicable state median. However, the courts will not extend a repayment plan past five years.

Making a repayment plan work

It will be your responsibility to keep the plan going towards completion. The plan may dictate that you make payments to your trustee or that the trustee may deduct money from your payroll. You also cannot incur additional debt without letting the trustee know about your plans first. More debt can jeopardize your ability to complete the plan.

Prolonging your payment plan is not your only concern. The bankruptcy court might dismiss your bankruptcy case if you fail to make payments. A court might also convert your case into a Chapter 7 liquidation. Following a repayment plan closely may keep you on track to successfully exit Chapter 13 and without any major loss of your possessions.