The bankruptcy process can be a relatively lengthy one. Each form of bankruptcy has slightly different requirements. Individuals typically understand that Chapter 13 bankruptcy takes substantially longer than Chapter 7 bankruptcy because of the repayment plan required of filers. Conversely, a Chapter 7 bankruptcy case can progress from initial credit counseling and paperwork filing to a discharge in as little as a few months.
A Chapter 13 bankruptcy will take much longer because there is a repayment plan that the person who is filing must complete before the courts will discharge their remaining eligible debts. How long does a Chapter 13 bankruptcy typically take?
The repayment plan lasts for multiple years
The longest part of the Chapter 13 bankruptcy process is the repayment plan. Those filing for bankruptcy almost always have to make a minimum of three years of monthly payments directly to the courts. The trustee overseeing their case will distribute the money to the creditors as negotiated during the meeting with those creditors. The plan could require up to five years of payments.
Given that there is a degree of planning and also a formal meeting that occurs before the beginning of the repayment plan and then another hearing required to finalize the process, most people can anticipate adding another six months to a year to the total timeline for a Chapter 13 bankruptcy.
In many cases, it will take a minimum of three-and-a-half years, if not longer, to go from the initial filing to the final discharge of any remaining balance on the unsecured debts someone has. Those who are able to adhere to the repayment plan as ordered by the courts can potentially eliminate the remaining balance after making 36 or more payments toward the outstanding balance on those accounts.
It doesn’t take years to secure protection
Although it will be multiple years before someone going through Chapter 13 bankruptcy receives their discharge, they have protection from collection activity from the first day that they file their paperwork. The automatic stay will end collection activity and help protect them from the worst consequences of aggressive collection efforts.
Learning more about how Chapter 13 bankruptcy works can help people feel more comfortable with choosing the right form of bankruptcy to meet their needs. Speaking with an experienced bankruptcy attorney can provide this clarity.