5- How Long does a Chapter 13 Take?

The size of your monthly Plan payments is determined by the amount you can afford to pay after paying necessary living expenses (including insurance, mortgage payments, etc.).

Typically, the Plan payments last for 36 months, unless additional time is requested, but in no event will they last more than 60 months. Therefore, if your payment analysis shows, for example, that you can afford to pay $200.00 per month (above and beyond your normal living expenses), you would pay that each month to the Chapter 13 Trustee, who would disperse it pro rata among your creditors. At the end of Plan period (36  - 60 months), you are discharged from all dischargeable unsecured debts, regardless of how much your creditors have received.

In addition to your Plan payments, you must stay current with any ongoing obligations you have to secured creditors, such as on your mortgage or other debts that are to be paid outside the Plan. Chapter 13 (or any Chapter of bankruptcy for that matter) only affects debts that you owe on or before you filed the bankruptcy.  No new debt may be incurred without court permission during the Plan, such as a newer car or home, or even credit cards. 

Future mortgage payments cannot be crammed down in a Chapter 13; only arrearages on a mortgage may be included and paid over the life of the Plan; but, you must stay current from the filing date forward with any future mortgage payments.

Secured debts (those with collateral) must be repaid in full, up to the value of the collateral, but Chapter 13 enables you to cure the defaults (reinstate the loans) and pay them out over 36 - 60 months. You also have the ability to restructure secured payments.  Let's say you owe $8,000 on your car, but it's now only worth $5,000; a Chapter 13 would let you cramdown the car note to the lower figure, the value of the collateral, and the $3,000 difference would be shifted to the unsecured list, and paid so many cents on the dollar, as your budget might permit.