How Long Is Chapter 13 Bankruptcy? (A 2024 Update)

What Is Chapter 13 Bankruptcy and How Long Does It Take?

Chapter 13 is a type of bankruptcy that can only be filed by individuals seeking to reorganize their debts with less than $2,750,000 in combined secured and unsecured debts as of the time of filing -See 11 U.S.C. § 109(e).

In addition to discharging unsecured debt such as credit cards and medical bills, Chapter 13 offers individuals the ability to get current on past-due secured debts such as mortgages and car loans—often saving homes from foreclosure.

An experienced bankruptcy attorney, Robert Stiberman, discusses how long Chapter 13 bankruptcy lasts and related issues. See Does Declaring Bankruptcy Clear All Debts?

How Long Does Chapter 13 Bankruptcy Take to Finalize?

A Chapter 13 bankruptcy starts with filing a voluntary petition and takes three or five years to complete. The duration of the Chapter 13 plan or applicable commitment period depends on the debtor’s income compared to the state’s median income for a family of the same size.

Debtors with monthly income exceeding the state median for a household of the same size must enter into a five-year plan or commitment period. In contrast, Debtors with monthly income below the state median for a household of the same size can choose between a three- or five-year plan—See 11 U.S.C. § 1325(d).

A Chapter 13 debtor will make monthly payments to the Chapter 13 Trustee during the duration of the Chapter 13 plan.

Chapter 13 Timeline

• Day 1 – Voluntary Petition is filed
• Day 2 – 14 – Unless the Court grants an extension, the Debtor must complete filing (1) schedules detailing assets and liabilities; (2) a schedule of current income and expenses; (3) a schedule of executory contracts and unexpired leases; and (4) a statement of financial affairs – See Federal Rule of Bankruptcy Procedure 1007(b))
• Day 21 -50 – the Chapter 13 trustee will convene a meeting of creditors – See Fed. R. Bankr. P. 2003(a).
• Day 30 – The debtor is required to commence making plan payments to the trustee within 30 days of filing the bankruptcy case, even if the court has not yet approved the plan (11 U.S.C. § 1326(a)(1)).
• Day 45 – Within 45 days of the creditors’ meeting, the bankruptcy judge must conduct a confirmation hearing to determine if the plan is feasible and meets the confirmation standards outlined in the Bankruptcy Code (11 U.S.C. §§ 1324, 1325). Note: In Florida, the Chapter 13 Trustee will first hear matters on a consent calendar to determine if confirmation issues can be resolved before presenting them to the presiding bankruptcy judge.
• Day 45 – plan conclusion – The Debtor must continue making the chapter 13 plan payments to the Trustee until plan completion, dismissal, or conversion to another bankruptcy chapter.
• The Chapter 13 Discharge – A Chapter 13 debtor is eligible for a discharge after completing all payments under the Chapter 13 plan, provided that the debtor: (1) certifies, if applicable, that all prior due domestic support obligations have been paid; (2) has not received a discharge in a previous case within specified timeframes (two years for prior Chapter 13 cases and four years for prior Chapter 7, 11, and 12 cases); and (3) has completed a financial management course approved by the U.S. trustee or bankruptcy administrator (if such courses are available) for the debtor’s district (11 U.S.C. § 1328).
• Plan completion or dismissal – A debtor must complete the plan within five years of filing (the “applicable commitment period”) unless the court grants an extension for cause. If a debtor fails to make all required payments under the Chapter 13 plan, the court may dismiss the case at any time after notice and hearing. On average, about one-third of Chapter 13 cases result in a successful discharge.

Does Chapter 13 Ever End Early?

In accordance with bankruptcy law, a Chapter 13 bankruptcy requires the debtor, the individual or married couple that filed for bankruptcy, to make monthly payments in the amounts specified in the Chapter 13 plan for 36 or 60 months. As per federal rules, Chapter 13 can end early and result in a dismissal if the debtor fails to make timely payments to the bankruptcy trustee.

Different Factors or Rules That Can Cause a Chapter 13 to End Early

A Dismissal of the Case

An order of bankruptcy dismissal can be entered by a bankruptcy judge for many reasons, including:

• Upon request from the Chapter 13 trustee for reasons including failure to provide tax returns, failure to remain current with plan payments, failure to file a confirmable Chapter 13 plan, or failure to appear at the 341 meeting of creditors.
• Upon request from the United States Trustee or any party, for reasons including exceeding the Chapter 13 $2.7 million debt limit at the time of filing, feasibility issues that prevent the debtor from making the Chapter 13 plan payments, and issues involving fraud or concealment of assets.
• Bankruptcies are also dismissed for failure to pay nay balance of the court filing fee when due.

A Chapter 13 bankruptcy debtor can also choose to voluntarily dismiss his or her bankruptcy case by filing a Notice of Dismissal with the bankruptcy court.

An Early Payoff of Chapter 13 Plan or Hardship Discharge

A Chapter 13 bankruptcy lasts between three and five years. Absent limited exceptions, the bankruptcy court is not likely to allow a debtor to finish the Chapter 13 plan period early and will require you to stick to the repayment plan length. The court may consider an early payoff if the following conditions are met:

1. The debtor cannot continue making payments for circumstances for which the debtor should not justly be held accountable.
2. Creditors receive at least what they would have received if the debtor’s nonexempt assets were liquidated in a Chapter 7 bankruptcy; and
3. It is not practical to modify the plan.

In our experience, when a debtor seeks an early payoff of the chapter 13 plan, the funds required to pay off the plan cannot come from the debtor but from another source. See 11 U.S. Code § 1328.

Converting the Case to Chapter 7 or Chapter 11 Bankruptcy

There may be situations where the debtor cannot keep up with plan payments and may choose to convert the case to a Chapter 13 bankruptcy. Additionally, a debtor may choose to seek to convert the case to a Chapter 11 bankruptcy for reasons such as not being eligible to remain in Chapter 13 due to debts exceeding the Chapter 13 limits as set forth in the bankruptcy code.

How Long Does It Take To Recover From Bankruptcy Chapter 13?

What Happens After Chapter 13 Is Paid Off

The purpose of bankruptcy is to offer the debtor a fresh start. Many people recover from bankruptcy once they receive the order of discharge, which releases them from any personal responsibility for the debts paid through the Chapter 13 plan. In many cases, since your disposable income is applied towards the debt repayment plan, you end up paying only a fraction of your unsecured debts while discharging 100% of them.

Can a Chapter 13 Repayment Plan Last Longer Than 5 Years?

There are instances where a Chapter 13 repayment plan can last longer than 5 years. During the COVID-19 pandemic, legislation was passed that allows a debtor to extend the Chapter 13 plan period to 84 months for COVID-19-related reasons—see the COVID-19 Bankruptcy Relief Extension Act of 2021.

Can You Change the Length of Your Chapter 13 Repayment Plan?

You can request to change the length of your Chapter 13 repayment from a three-year repayment plan to a five-year repayment plan for reasons that may include making smaller plan payments over 60 months vs higher payments over 36 months.

You can request to shorten your Chapter 13 plan from 60 to 36 months if your average 6-month monthly income at the time of filing your case was below the average median income for a household of your size in your state.

How Long Does a Chapter 13 Bankruptcy Stay on Your Credit Report?

A Chapter 13 bankruptcy filing will appear on your credit report for 7 years, which is better than a Chapter 7 filing, which remains for 10 years. Although bankruptcy will appear on your credit report, we found that many people start receiving credit offers within months after receiving their discharge. We have also seen cases where the credit score is higher after filing for bankruptcy.

How Do I Know When My Chapter 13 Is Over?

As part of the Chapter 13 closing process, the Chapter 13 Trustee will file a Notice of Plan completion, which will be followed by the entry of an Order discharging the Trustee and closing the Bankruptcy Case. 

Where Can Clients Find Attorneys Today?

Referrals from friends are usually the best way to find attorneys, followed by online searches for reputable and experienced bankruptcy attorneys. It may also be a good idea to contact the local bankruptcy bar for referrals.

In summary, a Chapter 13 bankruptcy lasts three to five years, during which time debtors make a monthly plan payment to the bankruptcy Trustee.

The bankruptcy law concerning Chapter 13 is intricate and has recently undergone significant changes. Therefore, debtors are strongly advised to seek guidance from competent legal counsel before taking any action.

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Call Stiberman Law at 954-222-2283 or complete our online form for a free Chapter 13 case evaluation.