When people file for personal bankruptcy, they are often in dire need of immediate financial relief. They may have just received service for a pending creditor lawsuit or may be at risk of losing a financed vehicle to creditor collection attempts.
Many people considering bankruptcy need immediate relief. They may also hope to complete the bankruptcy process quickly. Immediate relief is available in most bankruptcy scenarios. The automatic stay takes effect the same day that someone files and protects them from lawsuits and other aggressive creditor actions.
Unfortunately, the actual discharge of eligible debts can take far longer. In a Chapter 13 filing, for example, the filer must complete a lengthy repayment plan. How long does a filer have to make monthly payments before they become eligible for a discharge?
Repayment plans last for years
Chapter 13 bankruptcy generally takes more than three years to complete. The obligation to negotiate and fulfill a repayment plan is part of what makes the process so lengthy. The exact duration of the payment plan depends on the financial circumstances of the filer.
Factors including the filer’s current income, the type of debts they have and the amount they seek to discharge can influence the details of the repayment plan. The shortest repayment plan in a successful Chapter 13 bankruptcy is typically three years. In some cases, plans may last for up to five years. Those who make all of the necessary monthly payments can renegotiate some of their financial obligations and may be able to eliminate some of their debts through bankruptcy discharge.
Filers have to commit the majority of their disposable income toward payments. After fulfilling that responsibility, they then become eligible for a discharge of the remaining balances due on their eligible debts. In cases where a filer’s finances change significantly, they may need to request a modification of their repayment plan so they don’t fall behind on their financial obligations and risk the courts dismissing their case.
Understanding the rules that govern Chapter 13 bankruptcy cases can help people determine the best option when contemplating a bankruptcy filing. Those with significant income and/or valuable assets may find that Chapter 13 proceedings are an especially viable solution for their financial challenges.