The 3 year plan is based on your income.
Video Transcribed: Edward Kelley of 188 Debt Line answering your bankruptcy questions. We are doing video number two in our series about chapter 13. A little more complicated than seven. Last video we talked about your basic chapter 13, five year plan, based on your disposable income. I calculate for you and of course try to keep it as reasonable as possible, which we then use to submit a plan to pay off as much of your debt as possible and any debt remaining after the five years, then be discharged just like a witness seven.
Okay, so there’s a second kind of 13 and it comes up pretty often and that is the three year 13. So how do you get your plan from five years to three years? Of course everybody wants to do that. It’s just based on your income. If you could do a chapter seven but for certain reasons you want an elect to do a chapter 13, meaning if your income is under the cutoff for a seven and you would be able to do a seven if you wanted, then your chapter 13 will be only three years or 36 months in duration. Or at least it can be. You can still take it out as long as 60 months if you need to, to cover the debt that you have.
Now when I say to cover the debt that you have, I’m talking about secured debt. Obviously you don’t want to pay more to your unsecured creditors than you have to. But let’s say you’re going into the bankruptcy because you’re about to lose your home. We’re going to talk about that in the next video 
So let’s say you’re a year behind on your home and you have $1,000 months’ mortgage payments, so you are $12,000 behind. So when you go into the bankruptcy, in order to force the creditor to let you catch up, you’re going to have to pay that 12,000 on top of the regular mortgage payment.
So, if you normally would do a seven you could still do a 13, but your plan will need to provide for at least that $12,000. So if your disposable income allows you to do that within 36 months, that’s all you have to do. If you need more time, your disposable income is such that you still won’t be able to pay that 12,000 in 36 months… I probably should’ve used a higher number, but this is just to illustrate the point. Then you could extend that out as far as 60 months. Under no circumstances can you go beyond 60 months.
So that’s the second kind of 13 and you could use that to take care of your secured debt if you would have qualified for a seven and forced the creditor to let you make up the payments with the full force of the federal government, the bankruptcy code behind you. So that’s your second kind of 13. In the next video we’re going to talk about in detail, saving your house and your home and the other powerful tools that you get with the 13. So I’ll see you then from 188 Debt Line.