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How long does a Chapter 13 repayment plan last?

When people are struggling to make ends meet, there are many options available. Tennessee residents should understand them so they can make the best choice for themselves and their family. One such choice is filing for Chapter 13 bankruptcy.

Chapter 13 bankruptcy, also known as reorganization bankruptcy, give debtors the opportunity to pay back a portion of their debts overtime. The debt that is not paid back is ultimately discharged if individuals can otherwise stick to the court ordered replacement plan.

As Tennessee residents come to terms with filing Chapter 13 bankruptcy, they may have many questions about the process. One question can be -- how long the repayment plan will last in a Chapter 13 bankruptcy. The answer to this question depends on the specifics in each individual case. However, there is a general rule.

The court will look at the average monthly income for the debtor for the six months prior to the individual' bankruptcy filing. If during this time, the person's median income was more than the median income for the person's state then the repayment plan will generally be five years long. If the individual's median income was less than the state's median income in the six months prior to the bankruptcy petition, then the replacement plan is generally three years long.

If a debtor repays back all of the their debts during the repayment plan, then the plan will end. In other words, if an individual is able to pay back all of the person's debts before the three or five years is up, the payments will stop.

Deciding whether not to file for Chapter 13 bankruptcy is a big decision. Individuals should understand how long and how much they will be responsible for paying back. It is important that individuals understand how filing will affect their overall financial future. For more specific information and legal advice, individuals should speak with an attorney.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
Phone: 423-624-4002
Fax: 423-624-0509
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