How Do I Know When My Chapter 13 Bankruptcy Is Over?

Unlike Chapter 7 bankruptcy, which usually only takes a few months from start to finish, Chapter 13 bankruptcy takes considerably longer to go through. If you are relying on Chapter 13 bankruptcy protection, you may understandably wonder when you will finally emerge from it.

This article explains how the Chapter 13 bankruptcy process works, how long it usually takes, and what to look for to know that you have completed it and have achieved financial freedom.

If you need help with your Chapter 13 bankruptcy, please call Stone Rose Law at (480) 739-2448 or fill out our contact form.

The Timeline for a Chapter 13 Bankruptcy

Here are the milestones of a Chapter 13 bankruptcy that occur after you file your petition with the bankruptcy court.

1. Your bankruptcy attorney prepares a proposed debt repayment plan.
2. Your first monthly plan payment is due 30 days after the plan proposal.
3. Creditors receive notice of the proposed repayment plan, and have opportunity to review it and to raise any objections.
4. Creditor claims and any trustee recommendations for the payment plan are reviewed.
   1. Creditor claims are addressed and possible changes to the payment plan are made.
   2. The bankruptcy case is confirmed out of court in an ex parte proceeding.
5. The bankruptcy trustee, creditors, and the bankruptcy court judge approve the plan and the bankruptcy case is confirmed.
6. Once the final payment is made under the repayment plan, the bankruptcy trustee files a Notice of Completed Plan and a final certificate is filed for the discharge of bankruptcy.
7. The bankruptcy court issues the discharge order.
8. The trustee files a final report, and the bankruptcy case is closed.

How Long Does Chapter 13 Bankruptcy Usually Take to Complete?

The duration of your Chapter 13 bankruptcy depends in part on your debt load, the results of your means test, and whether you can pay all or only part of your unsecured debt, such as credit card balances or medical bills. 

Here are some general guidelines for how long a Chapter 13 bankruptcy takes:

• If your income is less than the amount set by the means test, your debt repayment plan will usually be for 36 months (three years), but you may propose a longer, 60-month (five-year) payment plan with lower monthly payments.
• If your income exceeds the means test, your payment plan period will usually be for 60 months. If you can pay your unsecured creditors sooner than the 60-month plan period, then your Chapter 13 may take less than the full period.
• If you can pay all of your unsecured creditors, then your payment plan may be a 100% payment plan, which may take less than the 36 or 60-month period you would normally be subject to.

Your Chapter 13 bankruptcy case will include an order of discharge and a final decree.

• The order of discharge has the effect of eliminating debts that are subject to it.
• The final decree is the marker that officially ends your Chapter 13 case.

When you complete your bankruptcy payment plan, the Chapter 13 trustee’s office must perform an accounting and audit. 

No matter the duration of your plan, you should keep making monthly payments under it until the bankruptcy trustee tells you to stop. If you overpay, then the trustee will refund you the overpayment.

It could take several months after your last payment to receive your discharge order and for the court to issue the final decree in your case.

What is a Bankruptcy Discharge?

The effect of a discharge in bankruptcy is to legally extinguish your obligation to pay any debts subject to the discharge order.

Although a discharge will permanently resolve unsecured debts (debts not secured by collateral like your car or your house), it will not extinguish any liens related to secured debts. This means that a discharge of secured debt amounts will not prevent creditors with valid liens from repossessing the collateral.

In a Chapter 13 bankruptcy, discharge of debt will occur as soon as possible after you have completed your debt repayment plan and your completion of a court-approved financial management course. 

To object to your discharge, a creditor must file a complaint in the bankruptcy court before the deadline set out in the notice of discharge and file a lawsuit.

It is possible for the bankruptcy court to close your Chapter 13 case without discharging your debts. This might occur if something goes wrong, like you do not complete the debtor education course in time.

What is a Chapter 13 Hardship Discharge?

Usually, under Chapter 13, you will receive a discharge order only upon completing your payment plan. 

In some cases, however, if you cannot complete your payment plan because of circumstances outside your control, you can request the bankruptcy court issue you a hardship discharge.

A Chapter 13 hardship discharge is only available to you if:

• Your unsecured creditors have received at least as much as they would have received had you filed Chapter 7 liquidation; and,
• Modifying your Chapter 13 plan is not practical.

Certain debts you will still owe after a Chapter 13 hardship discharge include:

• Priority unsecured debts, like spousal support, child support payments, and income taxes
• Student loans, absent proof of undue hardship
• Secured debts, like a home mortgage or a car loan
• Arrearages on secured debts, like past-due mortgage payments
• Most federal, state, and local tax liabilities
• Fines, penalties, and restitution amounts related to a criminal proceeding against you
• Damages caused by a drunk driving accident
• Debts you did not list in your bankruptcy petition

Do You Have Questions About Chapter 13 Bankruptcy?

Preparing a Chapter 13 bankruptcy case can be complicated, so it’s important to have sound legal advice in advance. 

In a free consultation, an Arizona Chapter 13 attorney at Stone Rose Law can help you assess all your debt relief options, including alternatives to bankruptcy and Chapter 7 bankruptcy.

If filing for bankruptcy under Chapter 13 is your best choice, your Stone Rose bankruptcy lawyer will ensure you receive the best repayment plan you can complete in the shortest possible time.

Contact our law office today for your free bankruptcy consultation at (480) 739-2448 or use our contact form to schedule an appointment.