Chapter 13 bankruptcy is often seen as an attractive alternative to using chapter 7 bankruptcy. With the use of chapter 13 bankruptcy, you won’t have to give up on a property and you can often secure various assets. Contributing your disposable income to your creditors with that agreement over a period of years can quickly wipe out your qualifying debt. Chapter 13 is often ideal for debtors that has a series of non-exempt property or that earn too much to qualify for Chapter 7 bankruptcy.
One of the largest questions that we often receive regarding chapter 13 bankruptcy has to do with the length of the repayment period. One of the simplest answers is that you will often hear is that chapter 13 bankruptcy takes between 3 to 5 years to pay off entirely. We will explain in greater detail how you can recalculate your repayment period should you choose to file for Chapter 13 bankruptcy.
The duration of your repayment often comes down to your income and how it compares to the state median. If you earn less than the median income for your state your repayment plan will often be negotiated at 3 years. If you earn more than the median income in the state to repayment plan will be negotiated for five years.
Your Reasons To Choose A Longer Plan
Even if you qualify to pay on a three-year plan you may want to opt-in for a five-year plan. A five-year plan will ensure that the automatic stay is in effect for the full five years of your bankruptcy repayment. If you need to pay for the value of non-exempt property in a chapter 13 case, it can also be beneficial for you to have access to more than three years to catch up on these payments. If you have mortgages that are in arrearages, you can spread out some of your missed payments over the longer repayment plan.
Can You Modify Your Chapter 13 Repayment Plan?
Many debtors often realize that they have to change the repayment plan. If you can receive a court order from a judge to allow modifications to your plan, you could turn over more of your collateral, adjust your plan if your income suddenly drops or adjust your plan if you have new expenses like healthcare expenses or a reduction in your disposable income that is within reason.
If you are wondering how much longer your Chapter 13 repayment plan may last, you can contact our staff today. We can put you on the path to managing your repayment plan as required.
This post was written by Trey Wright, one of the best Bankruptcy Lawyers in Tallahassee Florida. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.