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How Long Will a Chapter 13 Bankruptcy Case Take?

During a Chapter 13 bankruptcy, a person is allowed to keep their property and in exchange agrees to pay off a portion of their original debt. Unsecured debts are reduced and restructured into a repayment plan that lasts from 3 to 5 years depending on an applicant’s income and total debt. After the repayment period has ended, the case will end and any remaining debt will be cleared. 

Two main factors which determine the length of a repayment plan include:

  1. Total income: If the individual makes less than the median monthly salary in the state, they will qualify for a repayment period of 3 years. Those who make are usually put on a 5-year repayment plan.
  2. Time needed to complete payment: A person who qualifies for a 3-year plan may request a 5-year one if they are able to prove that having more time will help them meet the requirements of the repayment plan.

No matter which plan an individual qualifies for, the maximum time a Chapter 13 bankruptcy can last is 5 years. However, note that a Chapter 13 bankruptcy will appear on a credit report for 7 years.

The good news is that once a plan is made, it does not mean that it is set in stone. If your financial situation undergoes a drastic change, it could affect the overall length of your repayment plan. For example, if a debtor decides to turn over an asset for which they are unable to keep up payments, the total debt, and thus the length of repayment may be shortened. In cases of financial hardship, a plan may be temporarily suspended or lengthened from three to five years.

Questions about Your Bankruptcy? Contact Us!

The decision to declare bankruptcy is never easy and should only be taken after careful consideration of your financial situation as well as any available alternatives. Whether you are seeking freedom from debt through chapter 13 or chapter 7, our Muncie bankruptcy attorneys can help you to navigate the legal process. At Jackson & Oglesby Law LLC, we focus exclusively on the practice of bankruptcy law and have helped hundreds of people in your situation to secure a fresh financial start. We understand that bankruptcy can be complicated which is why we strive to help new clients understand their options in a free consultation.

Call (888) 713-5148 and speak to an attorney today. Weekend and evening appointments available.