Considering Chapter 13 bankruptcy? Then you’re probably wondering how long it will take. Chapter 13 bankruptcy takes a bit longer than Chapter 7, but it may be the best plan for you.
Let’s look at the factors that determine how long a bankruptcy takes so you can get an idea of your bankruptcy’s timeframe. If you’d like to pin down exactly how long your specific bankruptcy will take, contact Sawin & Shea for a free consultation.
Factors in the Length of Your Chapter 13 Plan
In a Chapter 13 bankruptcy, you create a plan to pay something to creditors and eliminate your debts. A Chapter 13 can help if you are not eligible for a Chapter 7. It can help you get caught up on things you would like to keep, like houses or cars. A Chapter 13 can help protect assets that may otherwise be at risk in a Chapter 7, or liquidation, bankruptcy case.
Your bankruptcy attorney will work with you to lay out the payment terms of your bankruptcy plan. And, of course, you’ll have an opportunity to look over these terms to make sure you understand them before agreeing to them. After a case is filed, a Chapter 13 Trustee collects the monthly payments and distributes them to creditors according to the Chapter 13 plan. They also make reports to the Bankruptcy Court indicating whether or not they think your plan conforms to the requirements of Chapter 13 law.
Your Chapter 13 bankruptcy terms are based on three main factors:
- The amounts and types of debt you have
- Your income
- Your assets
Your bankruptcy attorney will consult with you to work to craft a plan that works for your intended purposes and goals. A good bankruptcy attorney is very valuable because they’re always looking out for your best interests.
Variation in the 3 to 5 Year Bankruptcy Plan
Most Chapter 13 bankruptcy plans take three to five years, although some jurisdictions allow slightly shorter plans when the debtor has agreed to pay back 100% of their debts. The percentage of the debt you intend to repay can impact the timeline significantly.
When creating the payment timeframe, the bankruptcy trustee typically looks at the last six months of your income. If your income is below the state’s median income, expect your bankruptcy to span 36 to 60 months with some flexibility in adjusting your payments over time.
People with above-average incomes typically only qualify for 60-month plans. Although you may be able to negotiate a shorter timespan if you have no disposable income, this isn’t always possible.
But here’s some good news: Chapter 13 plans can’t go beyond 60 months by law. It’s good to know there’s a firm endpoint within sight, even if your plan will be 5 years long.
Other Factors That Can Impact Your Bankruptcy Timeframe
Finally, we’d like to point out that there are a few additional things that could affect how long your bankruptcy takes. Most of them are beyond your and your bankruptcy attorney’s control, so you may have to adjust your expectations about the timeline.
One of these factors is sudden job loss and an inability to secure new employment quickly. Your bankruptcy plan was based on a certain level of income, so job loss makes this very difficult to maintain.
Similarly, an unexpected illness or injury could make you unable to work. Now you’re facing a bankruptcy repayment plan that’s no longer realistic for you.
If this happens to you, talk to your bankruptcy attorney about a Chapter 13 hardship discharge. There are strict requirements to qualify, but if you can secure this type of discharge it may ease your stress and financial burden significantly.
There’s also a possibility that a Chapter 13 bankruptcy may end early due to a windfall of money you couldn’t possibly have foreseen. Maybe during your bankruptcy plan, a distant relative dies and leaves you a large sum of money, which you then use to resolve your bankruptcy.
Working with an Attorney For Your Bankruptcy
As we’ve explained, there can be many factors that impact the length of your bankruptcy. When you work with an experienced bankruptcy attorney, you can pursue the option that works with your lifestyle and finances.
Contact the bankruptcy attorneys at Sawin & Shea to talk about how many months your bankruptcy could take and what could affect the timeframe. We’re here to help you get a fresh financial start with a Chapter 13 bankruptcy plan that makes sense for you.
Sawin & Shea—Indianapolis Bankruptcy Attorneys
Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process.
Please do not hesitate to call us today at (317) 759-1483 or send an email for a free consultation. We are ready to help.