How to Overcome Common Challenges During Chapter 13 Bankruptcy

Filing Chapter 13 bankruptcy does not discharge your debt the same way Chapter 7 does, but it can make your debt more manageable and easier to repay. Still, the process is fraught with a number of challenges. Below, our Florida bankruptcy attorney outlines what these are, and how to overcome them.

Drafting a Reasonable Repayment Plan

One of the first and biggest challenges during Chapter 13 bankruptcy is drafting a reasonable repayment plan. Your plan must meet the legal requirements and it must be accepted by the court, the trustee, and your creditors. It must also include all of your disposable income to pay off debts over the next three to five years.

When creating your plan, take a full assessment of your financial situation. Create a list of all of your income, debts, and expenses. It is critical that you remain realistic about your essential living expenses and your income to avoid proposing an unreasonable plan.

Making Regular Payments

After your payment plan has been approved, it is critical that you make payments according to the plan. If you miss a payment, your bankruptcy case may be dismissed or converted to a Chapter 7, which could result in a loss of assets.

Setting up automatic payments through your bank can help ensure you do not miss payments. It is also important to prioritize Chapter 13 bankruptcy payments, monitor your finances closely, and make any necessary adjustments to your budget to ensure you can make the payments.

Changing Financial Situation

Life is anything but predictable and changes such as medical emergencies, job loss, or other unexpected expenses can interfere with your ability to make payments according to the plan.

If you experience a change in your financial circumstances, it is critical that you act quickly. Inform your bankruptcy attorney and trustee promptly about the change. It may be possible to modify the plan to reflect your new situation. Sometimes, it is even possible to suspend payments temporarily. This can help you avoid a dismissal of your case.

Managing Secured Debts

Secured debts, such as mortgages or auto loans, present another challenge in Chapter 13 bankruptcy. These debts have collateral, meaning if you do not make payments, the property can be foreclosed on or repossessed.

When managing secured debts, make sure your repayment plan prioritizes paying these in a manner consistent with the laws in bankruptcy debts to ensure you do not lose essential assets. Sometimes, new terms with creditors such as extended payment periods or lower interest rates or a reduction in the amount of debt to the value of the collateral can make it easier to manage these debts.  Counsel will advise what options are available for a given debt.

Our Bankruptcy Attorney in Florida Can Help You Overcome These Challenges

There are a number of challenges associated with Chapter 13 bankruptcy but with the right legal help, you can overcome them. At Florida Law Advisers, P.A., our Florida bankruptcy attorney can help you prepare for the process, create your plan with you, and help ensure the best outcome possible. Call us today at 1 (800) 990-7763 or contact us online to schedule a consultation and to get the legal advice you need.

Source:

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics