Chapter 13 bankruptcy is one of the most popular forms of personal bankruptcy. It allows people to protect their biggest assets without liquidating anything and to regain control of their finances even if they make a decent wage.
Chapter 13 Bankruptcy is also called a wage-earners plan because it involves a repayment plan. Before the courts will finalize your bankruptcy and grant you a discharge, you will have to make regular payments to the creditors whose debts are subject to discharge. How long will you have to continue making those payments?
Repayment plan terms depend on your circumstances
A Chapter 13 bankruptcy is a highly-customized process. The exact terms of your repayment plan will depend on your assets, your income and your debts. You can expect that there will be very little left in your monthly budget after paying your basic necessities and making the payment to the courts required by the plan.
You will have to disclose information about your income and personal property to the courts before the creditor meeting. Your creditors and the trustee overseeing your case will then ask you questions and negotiate a repayment plan. You can then begin making monthly payments to the courts, and the trustee will manage the distribution of those funds to the various creditors involved in your bankruptcy.
Generally, you can expect to make payments for between three and five years before your discharge in a Chapter 13 bankruptcy filing. Familiarizing yourself with the unique aspects of a Chapter 13 bankruptcy can make the decision to file a little easier for you.