When you file for Chapter 13 bankruptcy, you are making a commitment to pay off your debts over time in a plan that you and your creditors have agreed on. A repayment plan will last for years, but exactly how long it lasts can depend on a few factors. A Rockland County Chapter 13 bankruptcy lawyer can tell you more about the rules and what you should expect.

How Long Can a Repayment Plan Last?

A Chapter 13 bankruptcy repayment plan will generally last somewhere between three and five years. The biggest factor determining the length of your payment plan is your income. The general rule is that:

  • For filers with a monthly income less than the state median, a repayment plan will last three years
  • For filers with a monthly income greater than the state median, a plan will last five years

If your plan lasts for five years, you are going to end up paying more than someone with a similar level of debt and a three-year repayment plan. Because of your higher income, the state and creditors are going to demand more from you when you make arrangements to pay off debt in bankruptcy proceedings.

Can I Ask For a Longer or Shorter Repayment Plan?

If you have a five-year repayment plan, that’s what you are sticking with. You cannot ask for a three-year term instead. It’s also important to note that five years is the maximum length of time that your plan can last. You cannot extend it to six or seven years, or even five years and one month.

For those with a three-year plan, you may have the option of extending it. If approved, you would make payments for five years instead of three. You would pay the same amount though, so your payments can be smaller. However, you should remember that bankruptcy can stay on your record for a long time. Extending your plan can mean that this continues to affect your credit and your ability to secure loans, including mortgage loans, for years to come.

What If I Cannot Make My Payments?

Whether you are on a three-year or five-year repayment plan, you might run into a situation where you struggle to make your monthly payments. If you are legitimately unable to pay, you may be able to get your plan discharged due to hardship. This is not a common outcome though, so we recommend that you keep up with your payments.

Contact Our Bankruptcy Attorneys

Going through bankruptcy on your own can be tough. Contact the Lauterbach Law Firm and schedule a consultation with our team before you do anything. We can help you figure out if a Chapter 13 bankruptcy and repayment plan is right for you, and then we can help you file so that you do not make any costly mistakes.