A Chapter 13 Bankruptcy generally lasts from 3 to 5 years. How long a Chapter 13 Bankruptcy must last depends on whether the debtor is over median or under median debtor. What this means is: when the petition was filed (based on the last 6 months income not counting the month of filing), did the debtor make more or less than the average household of the same size in Texas? If more, than the debtor is over median. If the debtor is over median, most bankruptcy courts require that payments for 5 years. This is because income may increase, or the debtor may come into a windfall during the 5 year period, resulting in some payment to unsecured creditors.
Even if a debtor is under median bankruptcy, and only required to be in a 3 year plan, many people prefer to extend the period to 5 years to lower the payment. For example, if using a Chapter 13 Bankruptcy plan to try to catch up on past-due mortgage payments of $10,000, repayment over 3 years is an average payment of $277.77 per month but repayment at 5 years is $166.00 per month.
Often when people use a Chapter 13 Bankruptcy to reorganize their debts, they have depleted all of their savings, and need the cash flow relief that a longer period can provide. Deciding what is best for your situation is something your bankruptcy lawyer can help you with by discussing payment amounts and what you can afford.
Your Next Step to Debt Relief
If you are struggling with debt, consult with an attorney who can give you guidance on options available to you. Each case is different and consultation with an attorney knowledgeable about the law as it applies to your particular circumstances is an important first step in resolving debt.
Read More About Bankruptcy and Debt Relief
Chapter 7 – Usually the cheapest and fastest type of bankruptcy, Chapter 7 can wipe out credit cards, medical bills, and loans.
Chapter 13 – Does everything that Chapter 7 does, but with the added benefit of being able to help catch up on past due mortgages, car payments, and taxes.
Taxes – If you owe money to the IRS, there may be several different options for you, including some non-bankruptcy options.
Student Loans – There are many solutions to student loan issues, including getting a better payment plan, curing a default, and even loan forgiveness.
Debt Lawsuit Defense – When a creditor sues you over a debt, you can respond with a defense, which may allow you to win the lawsuit.
Loan Modifications – A special agreement between you and your mortgage lender might help you with a past due mortgage loan.
Debt Library – More in-depth articles on some of the more detailed areas of bankruptcy and debt relief.