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What Happens When You Complete a Chapter 13 Bankruptcy Case?

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Completing a bankruptcy payment plan under Chapter 13 may not seem easy, but it does bring a great many benefits for those who can stick with it. Unlike some Chapter 7 bankruptcy cases, Chapter 13 petitioners are typically able to retain their property and can return to having a healthy credit score in less time after successfully completing their scheduled payment plan. Learn more about how Chapter 13 plans are completed and what petitioners stand to gain by making all their payments, below.

How many payments you’ll owe can depend on changing information

Most Chapter 13 bankruptcy payment plans last for three to five years. Life can change substantially during that time. Some Chapter 13 petitioners may be able to predict with great accuracy how many payments they’ll need to make, and in what amount, from the start of their case. Others may experience a stark change in their income level or cost of living that can affect the amount of their Chapter 13 payments. The amount of your payments can also change based on receiving a final amount due on your debts, which can change your lawyer’s initial estimate of your monthly payments.

If you believe you’re nearing the end of your case and want to know how many payments are remaining, you can ask your lawyer for an estimate. Your lawyer can also ask for an exact calculation of the payments remaining from your bankruptcy trustee.

Once all your payments are made, your bankruptcy trustee will alert you and your bankruptcy lawyer to this fact. Your attorney will have a chance to review your case before your trustee reports the fact that you’ve completed your payments to the judge overseeing your case. The judge will then hold a hearing where your remaining general unsecured debts will be discharged, and where your case will be closed.

Finishing your payment plan brings many benefits

Once you’ve made all the payments you owe on your Chapter 13 plan, you’ll gain a number of important benefits which won’t take effect otherwise. If you had an unpaid priority tax debt that was not old enough to be discharged, any penalties or interest you owed on that debt will be eliminated if you make all your payments. By stopping part of the way through your plan, those costs may be imposed again. If a second or third mortgage was stripped from your home through bankruptcy, then that debt will be discharged when your bankruptcy is completed. Additionally, if you are using a Chapter 13 case to avoid foreclosure and become current on your mortgage, failing to make payments and falling out of bankruptcy protection could result in the bank initiating foreclosure proceedings.

Get help finding a way out of crushing debt by contacting a knowledgeable and dedicated Maryland bankruptcy lawyer at Haeger Law for a free consultation at 888-463-3520.