How Long Does Chapter 13 Bankruptcy Take?

When people are considering chapter 13 bankruptcy, they usually have a number of questions. One of the most common is “how long is this going to take?” People want to know when they will finally be able to put this debt behind them and begin rebuilding their financial life.  Well, let’s take a look and see if we can answer that question for you.   

An Overview of Chapter 13 Payment Plans

You’re not going to be done with chapter 13 bankruptcy until your payment plan is complete, so let’s go over how the payment plans work. As part of chapter 13 bankruptcy, you will pay off a portion of your debts using a payment plan. The repayment amount to creditor(s) can range from 1% to 100% based on a variety of factors.  You will propose a payment plan of monthly payments that last 3-5 years. The exact amount you pay per month is based on your income and will vary from person to person. Once the payment plan is successfully completed, any remaining debt is discharged.

Who Qualifies

Before worrying about how long bankruptcy will take, you should make sure you are eligible. You see, not everyone qualifies for chapter 13 bankruptcy. To be eligible you must:

• Be an individual, not a business entity
• Be up to date on your tax filings (or very quickly fix this)
• Have an income source
• Have less than $465,275 of unsecured debt
• Have less than $1,395,875 of secured debt

As long as all of the above is true, you qualify for chapter 13 bankruptcy. 

How Long Does It Take to File Chapter 13?

Filing for chapter 13 bankruptcy is a relatively straightforward process, especially if you make use of an experienced bankruptcy attorney. Filling out the required documents and submitting them can be done in a matter of days or weeks. In an emergency, it can be done in a few hours.  You will then have to wait on the courts to schedule hearings and handle other administrative affairs. In general, you can expect the entire filing process to take 4-6 months. 

How Long Does Bankruptcy Chapter 13 Last?

Your chapter 13 bankruptcy will last as long as your payment plan takes. This means usually 3-5 years. Some special types of plans may be shorter.  It will all depend on the length of the payment plan you propose. Ensure you choose a payment plan that is realistic. You do not want to propose the shortest plan possible in hopes of expediting the process and then end up not being able to make the payments. 

Chapter 13 Bankruptcy Timeline

There are many steps to chapter 13 bankruptcy. Understanding each of these steps in detail will help you have a better idea of where you are in the process and how long it will take.

Pre-Filing

Pre-filing is the preparation you need to do before you can officially file for bankruptcy. This includes completing required credit counseling, gathering all necessary documents regarding your debts and financial situation, as well as filling out all required schedules and statements. You will also need to draft a repayment plan, which is best done with an attorney. You can then file your petition for chapter 13 bankruptcy with the courts. This phase usually takes a few weeks, but can be much shorter with a skilled attorney.  

Automatic Stay and Trustee Appointment

Once you have submitted your petition for bankruptcy, an automatic stay will be put in place. This is a legal order that immediately halts most creditor actions against you, including any efforts at debt collection. A trustee will also be appointed. This is the person who is appointed by the court to manage your assets, act as an intermediary between you, creditors, and the bankruptcy court, and ensure compliance with bankruptcy regulations. 

Meeting of Creditors

Next, there will be a meeting of creditors.  This is a meeting where the trustee and creditors can ask you questions about your financial situation. The intent is for the trustee to gain a full understanding of your financial situation, including your debts, assets, income, expenses, and past transactions. This meeting usually takes place 30-40 days after filing.

Plan Confirmation Hearing

This is a court hearing where the court will review your situation and your proposed payment plan. It culminates with the court deciding whether or not to confirm your plan. This will typically take place 60-90 days after the meeting of creditors. 

The Repayment Period

Once your plan has been confirmed, the repayment plan is “locked in”.  You will continue to make monthly payments to the trustee, who will then distribute payment to your creditors. This is the longest part of the chapter 13 process and will typically take 3-5 years depending on the specifics of your payment plan. 

Completion and Debt Discharge

At the end of the repayment plan, the bankruptcy is considered completed. Any remaining debt is discharged, meaning that you are no longer legally obligated to pay it. At this point, you are ready to move on from your bankruptcy.

Factors That Influence the Length of Chapter 13

Many factors influence the length of a chapter 13 bankruptcy. This includes:

• Household income
• Level of assets
• Types of debt to repay (car loans, mortgage arrears, tax debt, credit cards, medical bills, etc.

It is important to be patient throughout the entire process. Other than completing the pre-filing stage in a timely manner, there is not much else you can do to speed up the process.

What Happens After Chapter 13 Ends?

When chapter 13 bankruptcy ends, a discharge order is issued. This officially  releases you from most debts included in the repayment plan. This means creditors can no longer pursue legal action or collection efforts for those discharged debts. The only thing left to do is to focus on rebuilding your financial help in order to avoid another bankruptcy in the future.