Good Timing Can Shorten Your Chapter 13 Case by 2 Years

 Posted on May 15, 2025 in Chapter 13

Chapter 7 bankruptcy is the most popular form of bankruptcy for a few reasons, but perhaps most notably because it takes a significantly shorter amount of time to finalize. Despite Chapter 7’s many benefits, sometimes, after consulting with your attorney, you might conclude that Chapter 13 bankruptcy is the right option for you. However, Chapter 13 bankruptcy takes much longer than Chapter 7: it requires you to spend three to five years repaying your debts through a payment plan, instead of being able to "discharge", or write off, all or most of your debts within about four months as is the case in Chapter 7.

Nevertheless, it is possible to reduce the time you spend in Chapter 13. In fact, utilizing your income level and wise timing in your filing of a Chapter 13 "adjustment of debts" case could shorten your payment plan from five years to three. An experienced San Antonio, TX Chapter 13 bankruptcy attorney can advise you on ways to shorten the length of your Chapter 13 payment plan.

How Does the Timing of a Chapter 13 Filing Affect the Length of Repayment? 

Timing in the filing of a Chapter 7 case is important. It can affect whether you qualify to be in a Chapter 7 bankruptcy case. If your income is too high you may not pass the "means test." If you cannot pass this test, you will need to go through a Chapter 13 "adjustment of debts" case instead.

But what if you need a Chapter 13 case? It can be a better option in certain circumstances, after all. If you have debts that cannot be discharged, like recent income taxes, child or spousal support, or debts you want to catch up on such as mortgage payments so that you can try to avoid foreclosure, Chapter 13 buys you time to take care of those special debts. There are many additional reasons Chapter 13 may be a better option for you than Chapter 7, for example, because you do not have to give up your assets in Chapter 13 bankruptcy.

So, assume you want to file a Chapter 13 case. One important question is how long you will be required to pay into your payment plan. Sometimes you would want to have as much time as possible to stretch out and lower your plan payments. But in other circumstances, you might just want to get it over with as soon as possible. Then you can get on with life, and start rebuilding your credit.

Just as timing your filing can make a difference in qualifying for Chapter 7, timing your filing and income levels can make a difference in the length of your Chapter 13 case.

What Determines the Length of Your Chapter 13 Case?

There is no "means test" under Chapter 13, but your income at the time of filing still determines the length of your Chapter 13 case. The same unusual way of calculating income in the Chapter 7 "means test" is used in Chapter 13. That same calculation of income determines whether your payment plan can take only three years or instead must last five.

How Is Chapter 13 Income Calculated for Purposes of Determining the Length of the Case? 

To calculate your income for this purpose:

• Include almost all sources of money other than Social Security payments (not just your taxable income)

• Total all gross amounts received precisely during the six full calendar months prior to filing your case.

• Multiply this six-month amount by two to arrive at your annual "income" total.

• Compare that annualized amount to the "median income" for your state and family size.

You may finish your Chapter 13 case in three years instead of five if your income is not more than the applicable "median income" for your state and family size.

The "median income" amounts are adjusted regularly and are available online. You can find those state-by-state amounts for cases filed between April 1, 2024 and May 14, 2024 here. (If you are reading this well after the date this article was posted, click here to see if this table has subsequently been updated.)

If you want, you can go through each of the specific steps in this calculation right on the official bankruptcy court form. Download or print the Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period.

How Does Smart Timing of Filing Impact the Length of Your Chapter 13 Case?

In Chapter 7, even just a day or two difference in the date of filing a case can put you over or under your applicable "median income" amount.

This is even more crucial in Chapter 13 than in Chapter 7. In Chapter 7, the income step is just the first step of the "means test." Even with a higher-than-median income, you may be able to pass the "means test" based on your expenses or other considerations. But under Chapter 13, your income as calculated above determines whether or not you are required to be in Chapter 13 bankruptcy for five years or if you can pay it in less time. Because income can fluctuate, by timing when you file for Chapter 13 so that you file when your income is no larger than the median income in Texas for your family size, you can shorten the length of time it takes to resolve your bankruptcy status.

What Else Should You Know About Deciding How Long to Spend In Chapter 13 Bankruptcy? 

Even if your income allows you to finish your Chapter 13 case in three years, you can typically take longer, if you want. As mentioned above, there are situations in which you may want to stretch out your Chapter 13 payments and thereby reduce your monthly payments. Notably, if you know your Chapter 13 payments would be too high for you to pay in that shorter time frame, you may also want to keep paying those bankruptcy payments for the full five years. That will save you from having to later modify the terms of your repayment plan to reduce your payment amounts on the grounds that your Chapter 13 payments are too high.

But if you are able to shorten your case and it suits your personal financial situation to do so, you would not be required to spend the full five years in your Chapter 13 repayment plan. And if you shorten your case, you generally do not have to pay any more to your creditors.

Also, if you are required to go the full five years based on your income, that does not always hurt you. To pay everything you want and need to pay may take that long, without necessarily paying more to your creditors.

However, there are situations in which, based on your budget, you could finish your payment plan in three years, or you could finish sometime between three to five years. ​​In these situations in which you could shorten the time frame for payment, not doing so and instead being required to go the full five years means paying more to your creditors—sometimes significantly more. It also delays you getting to that point when you can finally get your fresh financial start. An experienced attorney can advise you on your options and how they suit your circumstances.

Call a San Antonio, TX Chapter 13 Bankruptcy Attorney

When you seek skilled bankruptcy representation, you can turn to the experienced New Braunfels, TX Chapter 13 bankruptcy lawyer at Law Offices of Chance M. McGhee. Attorney Chance McGhee can work with you to help you determine which type of bankruptcy makes sense for you. Call the office at 210-342-3400 for a complimentary consultation.