What is the Time Frame Involved with a Chapter 13 Bankruptcy?

As you may or may not have already learned, a Chapter 13 is considerably different from a Chapter 7. Where the latter provides the debtor with immediate financial relief, a Chapter 13 is a repayment plan (typically lasting 3 to 5 years). Unlike standard repayment plans that you may have lined out with other creditors in the past, a Chapter 13 is a binding agreement to repay your debts and is issued by a federal bankruptcy court judge. Whether the creditors agree with the plan or not, they are bound to the judge’s orders once the repayment plan has been confirmed.

Chapter 13 derives its name by the chapter of the same name as prescribed by the US Code. Individual debt reorganization and repayment is lined out through this chapter of the US Code. The official name of Chapter 13 is called an “Adjustment of Debts of an Individual with Regular Income.” Additionally, the code prescribes that the repayment schedule will last no less than 3 years but not to exceed 5 years in duration.

As of 2005, changes made with the bankruptcy code have made 5 years the normal time period for a Chapter 13 repayment plan. Therefore, you should prepare yourself for this because you will be subject to the plan’s terms and conditions for the next 5 years. Once you have repaid your creditors and fulfilled the obligations of your Chapter 13 repayment plan, you will usually be eligible a final “discharge.”

This is a special bankruptcy court order which protects you from further claims that may be lodged by these creditors. For example, if you and your credit card company settle for 5 cents on the dollar and you maintain your repayment schedule for 5 years, that creditor cannot come back on you and then demand the other 95% of the debt that was discharged under your Chapter 13 filing.

Clark & Washington is an experienced Chapter 13 legal firm that can assist you with the process from start to finish. If you have been contemplating filing a Chapter 13 in order to relieve your financial stress, please call us today at (407) 898-0299. Or feel free to fill out the confidential contact form that you will find on this website. We will be more than happy to assist you in anyway that we can as well as answering any questions you may have regarding this.