If you’re thinking about Chapter 13 bankruptcy, you want to be able to plan your future. Part of that planning means you’re going to need to figure out just how long your Chapter 13 Plan will last.
The length of your Plan is determined almost entirely by your household income during the means test period.
- If your household income is above median then your Chapter 13 Plan will last five years.
- If your household income is below median then your Chapter 13 Plan will last three years.
Your household is defined by the U.S. Census Bureau as:
[A]ll the people who occupy a housing unit. A house, an apartment or other group of rooms, or a single room, is regarded as a housing unit when it is occupied or intended for occupancy as separate living quarters; that is, when the occupants do not live and eat with any other persons in the structure and there is direct access from the outside or through a common hall. A household includes the related family members and all the unrelated people, if any, such as lodgers, foster children, wards, or employees who share the housing unit. A person living alone in a housing unit, or a group of unrelated people sharing a housing unit such as partners or roomers, is also counted as a household.
Remember that the length of the repayment period has nothing to do with the monthly payment amount. Nor does it have a bearing on the percent of the debt you are going to be required to pay back. Those figures are independent on the Plan length.
Remember that you are not required to pay back your creditors in full in a Chapter 13 bankruptcy.
Lots of people end up paying very little to their unsecured creditors, regardless of the amount of time they are under the court’s control. That’s one of the many reasons why you want to sit down with an experienced lawyer to go through the numbers with you.