If you are thinking about filing for Chapter 13 bankruptcy to get rid of debt, you need to go over your individual circumstances and the ins and outs of this strategy. Chapter 13 bankruptcy allows many people to retain assets while eliminating their debts. However, this approach requires those who file to work through a repayment plan. The duration of Chapter 13 repayment plans varies from one individual to the next.
In comparison to Chapter 7, Chapter 13 is often advantageous, especially for those who do not want to lose their home due to foreclosure.
Looking at income and Chapter 13 repayment plans
According to the United States Courts, Chapter 13 repayment plans typically last between three and five years. The length of a repayment plan depends on a debtor’s income. For example, if your income is above the state median, you will likely have to make regular payments for five years. However, those with incomes below the state median sometimes have a Chapter 13 repayment plan that lasts for three years. However, the law prohibits repayment plans from exceeding five years.
Looking at the Chapter 13 hardship discharge
In some instances, those who are unable to continue making payments due to significant financial hardships are able to have their repayment plan discharged. In order to secure a Chapter 13 hardship discharge, debtors must satisfy a number of requirements. For example, the hardship discharge is typically only an option if financial hardships are out of a debtor’s control and creditors receive roughly the same amount as they would receive through a Chapter 7 bankruptcy case.