How long is chapter 13 bankruptcy?

Written By: Attorney Robert Stiberman | Bankruptcy, Chapter 13 Bankruptcy, Uncategorized Updated February 07, 2023

Chapter 13 is a type of bankruptcy that can only be filed by individuals seeking to reorganize their debts. In addition to being able to discharge 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 – many times saving homes from foreclosure. Bankruptcy attorney Robert Stiberman discusses how long is chapter 13 bankruptcy and related issues.

How long does Chapter 13 bankruptcy take?

A chapter 13 bankruptcy starts with the filing of the voluntary petition and typically takes three to five years to complete. The duration of the chapter 13 depends on the length of the chapter 13 plan filed by the debtor. In accordance with the bankruptcy code, Chapter 13 plans have a duration of either 36 or 60 months. A chapter 13 debtor will make monthly payments to the Chapter 13 Trustee during the duration of the Chapter 13 plan.

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, a 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 which prevent the debtor from being able to make 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 voluntary 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:

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

From our experience, where a debtor is seeking an early payoff of the chapter 13 plan, the funds required to payoff 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. Addtionaly, 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 a 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 from the debts paid though 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 pandemic, legislation was passed that allows a debtor to extend the chapter 13 plan period to 84 months for COVID related reasons.

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 which may include making smaller plan payments over 60 months vs higher payments over 36 months. You can request to shorten you 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. This is better than a chapter 7 where it remains for 10 years. Although a 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 Trustee and Bankruptcy Case closed.

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.