Chapter 13 repayment plan and tips to complete it

Recently on our bankruptcy forum a user wrote, “My spouse and I have decided to file Chapter 13 bankruptcy. Given our propensity to overspend and trouble staying on a fixed budget I am worried that we may not be able to complete the plan. Do you have any tips for ensuring that we finish the plan and get a fresh financial start?”

Bankruptcy experts, including creditors, judges, debtors, and trustees support using Chapter 13 bankruptcy as a means to help families keep certain assets and repay certain unsecured debts. Unfortunately, however, over the last decade it’s estimated that as many as two-thirds of all debtors fail to complete their Chapter 13 plan before the completed payoff date and sometimes before unsecured creditors have received any payments at all.

Although a percentage of the Chapter 13 filers are able to convert to a Chapter 7 bankruptcy plan, many debtors simply have their Chapter 13 cases dismissed without ever receiving a discharge or a resolution to their financial crisis.

With that in mind, let’s take a closer look at several steps you can take to ensure you complete your plan and you are able to make a fresh financial start.

Tips to completing your Chapter 13 bankruptcy repayment plan

  1. Create a Chapter 13 bankruptcy plan you can afford.

The first step to successfully completing your Chapter 13 bankruptcy plan is to create a plan you can afford. To do this you must be honest about your financial situation by including all of your expenses, assets, debts, and income on your Chapter 13 bankruptcy petition.

After you have a solid understanding of your financial situation you can discuss your options with your bankruptcy lawyer. While the amount and type of debts you owe may determine how much you have to repay within your plan, if you create a plan that you cannot afford then your chance of success is limited.

  1. Create a budget and stick to it.

No one wants to create a budget much less have to live within one. Getting out of debt, however, will require more self-discipline than you have ever had before. The good news is that if you make some sacrifices for a few years then you will be able to live debt free.

  1. Understand your options if your financial situation changes. 

Life is unpredictable. You might get sick and not be able to work or your wife might lose her job. If you face any type of financial change it’s important to notify your bankruptcy lawyer. In some cases, the bankruptcy court may be willing to extend your repayment plan, modify your plan, or temporarily suspend your plan. In other cases, you may also be able to refinance certain types of debts or take out a new loan to make a needed purchase.

Finally, if your financial situation has completely changed and you are no longer able to complete your Chapter 13 bankruptcy plan, under some conditions, you may be allowed to convert your case to a Chapter 7 bankruptcy.

Bottom Line:

Completing a Chapter 13 bankruptcy repayment plan can be difficult. In fact, many debtors have their cases dismissed prior to completion. Before filing Chapter 13 bankruptcy make sure you understand what must be done.

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Beth L. is a content writer for Better Bankruptcy. Good content and information is one of many methods we utilize to bring you the answers you need.