Filing for bankruptcy can be a difficult and stressful process, but it doesn’t have to be. Chapter 13 bankruptcies allow you to create a repayment plan that is approved by your creditors and the legal system. This type of bankruptcy differs from a chapter 7 bankruptcy, which uses your assets to pay off your creditors.
Once your chapter 13 bankruptcy plan is approved, you may be tempted to leave the protection of the plan early. However, doing so may mean that you become responsible for debts again and debt collectors can start contacting you. Before making a decision, it is important to understand the difference between being under the protection plan and leaving early.
The Process Of Filing For Chapter 13 Bankruptcy

The government has set a limit of $2,750,000 in total secured and unsecured debts that people can have to be eligible for chapter 13 relief. Your income doesn’t necessarily have to come from an employment source- self-employment and operating an unincorporated business count as well. Plus, these limits are adjusted regularly according to inflation.
As you begin the process of filing for bankruptcy, you must understand what types of documents and information you’ll need. Among other things, you’ll need tax returns from the previous year as well as any years during which your case is active. You’ll also be required to attend credit counseling within 180 days of filing.
When you file your petition and repayment plan with the bankruptcy court, a trustee will be assigned to manage your case. This trustee will convene a meeting with your creditors, during which you’ll be asked questions under oath. After that, the court will hold a hearing on your chapter 13 bankruptcy case.
With this plan, you can make regular payments over 3-5 years. For those whose income is below the state median income, the plan will last for 3 years. In cases where the debtor’s income is higher than the state median income, the plan will last for 5 years.
Your reasonable living expenses will be taken care of with the income from your job. The money left over, which is your disposable income, will go towards paying off your debts.
Ways To Get An Early Discharge From Bankruptcy

It’s not often that you can pay off all your debts before your repayment plan is up, but it is possible. maybe you come into some money or get lucky and win the lottery. Whatever the case, you might be able to pay off your debts and get out of the plan before it ends. Keep in mind, though, that early discharges aren’t always granted.
To be given a discharge, you must go through a court notice and hearing process.
- All domestic support obligations have already been paid
- No discharge was given to the debtor in a prior bankruptcy case
- The debtor has completed an approved financial management course
Losing your job or experiencing a decrease in income can make it difficult to keep up with your chapter 13 plan payments. You might see a drastic change in your circumstances that makes it difficult to make your plan payments. However, there are options available to help you through this difficult time.
A chapter 13 hardship discharge may be an option for you depending on your circumstances. This type of bankruptcy allows you to repay some, but not all, of your debts. Creditors who have claimed you should receive at least as much money as they would under a chapter 7 bankruptcy case before your case is discharged.
Leave Bankruptcy Protection Early: Advantages And Disadvantages
There are several advantages to seeking an early discharge from a chapter 13 bankruptcy plan. Doing so can allow you to get a fresh start financially, without the burden of debt hanging over your head.
The Debts You Owe To Your Creditors Have Been Discharged Or Modified
A chapter 13 bankruptcy plan usually requires you to make payments over a certain period. However, sometimes you may be able to get an early discharge from the plan. This can happen for either of two reasons: either you couldn’t make the required payments due to an unexpected hardship, or you were able to pay off your debts in full.
Paying off your debts in full can give you a sense of freedom and relief. On the other hand, a hardship discharge means that you are no longer responsible for certain types of debts.
Your Money Is Yours To Spend However You Want
Leaving a chapter 13 bankruptcy plan early means that you are no longer legally bound to make regular payments. This gives you the freedom to spend your money as you see fit, without having to adhere to a set plan.
Leaving Bankruptcy Protection Early Has Its Disadvantages

Filing for an early discharge from your chapter 13 bankruptcy plan may not always be the best decision. Be sure to weigh the pros and cons carefully before making a decision. Some of the disadvantages you may face are listed below.
Your Debt Must Be Paid In Full
Leaving chapter 13 bankruptcy protection early might sound good, but you may not get the same payment relief as you would by completing the plan. Paying all your debts in full is required to leave early, so consider whether that is something you can realistically do. It may be to your advantage to stay in the protection plan and continue making payments until it is completed.
The System Facilitates The Collection Of Debts
The moment you file for chapter 13 bankruptcy, an automatic stay goes into effect. This means that your creditors are barred from taking any sort of collection action against you. This includes filing a lawsuit, continuing with an existing lawsuit, garnishing your wages, or even calling you to ask about the debt.
After you cancel your subscription, you are no longer protected from debt collectors. They may resume debt collection efforts if you still owe them money.
The Other Benefits Of Protection Are No Longer Available To You
Filing for bankruptcy protection can help you keep your home and possessions, as well as protect any cosigners on your loans. creditors may not pursue collection efforts with cosigners once they have filed for bankruptcy. In a Chapter 13 bankruptcy, you may also be able to stop foreclosure proceedings.
It is important to understand that leaving chapter 13 protection can have serious consequences. Without the protections afforded by chapter 13, you may find yourself in a difficult financial situation.
Final Thoughts
Even though you might have a regular income, it can be difficult to manage your financial obligations. Filing for Chapter 13 bankruptcy might be the right option to help you keep your house from foreclosure and deal with other debts.
When you file for Chapter 13 bankruptcy, you may be able to apply for an early discharge of your debt. This option has both pros and cons that you should consider before making a decision. Remember that just because you apply for an early discharge doesn’t mean it will be automatically approved.