I often refer to a Chapter 13 Bankruptcy as a government-sponsored debt consolidation plan with unique twists. For example, in Chapter 13 Bankruptcy, the plan duration is limited to 3-5 years. We cannot go shorter than 3 years and we cannot go longer than 5 years.

In a Chapter 13 bankruptcy, a debtor pays as much as he or she can afford each month, in a three to five year repayment plan. Typically, the debtor only pays a fraction of all of their total debt, and upon successful completion of the Chapter 13 bankruptcy, will receive a bankruptcy discharge that wipes out the majority of their remaining debt (with exceptions, such as child support debt or student loan debt).

A person who files a chapter 13 bankruptcy case is required to pay as much as they can afford towards their debts in a three-to-five year repayment plan. After successfully completing their plan, the person who filed for bankruptcy (aka the “debtor”) receives a discharge wiping out their remaining debts, with certain exceptions (e.g. student loans and child support).  There are a number of factors that determine exactly how much the debtor will have to pay, each month, in order for the bankruptcy court to “confirm,” or officially approve, their repayment plan and allow the debtor to receive a discharge.