Common Mistakes Preventing Completion of Chapter 13 Plans
For any individual in South Florida planning to file for Chapter 13 bankruptcy, it is essential to have a clear understanding of how this type of bankruptcy works and the mistakes that are important to avoid if you want to complete the terms of your repayment plan. Unlike liquidation bankruptcies filed under Chapter 7, Chapter 13 bankruptcy cases are “reorganization” bankruptcies that are also commonly known as “wage-earner’s” bankruptcies. In this type of bankruptcy, no assets are liquidated. Instead, the debtor proposed a repayment plan that will last from three to five years, in which they will make regular payments to a bankruptcy trustee. Over the terms of the repayment plan, secured and priority creditors will be repaid in full, and unsecured nonpriority creditors will receive a portion of what they are owed. At the end of the case, remaining debt can be eligible for discharge.
Given the long length of Chapter 13 cases, there is substantial room for error if you are not working closely with a bankruptcy lawyer. What are some of the common mistakes that often prevent a debtor from completing the terms of their Chapter 13 repayment plan? Consider the following information from our West Palm Beach bankruptcy attorneys.
- Being Unrealistic About Your Budget
It is critical to be realistic about your budget and what you can afford (and what you cannot). If you end up creating an unrealistic budget for yourself that prevents you from being able to make all of your Chapter 13 payments in a timely manner, your discharge and completion of your bankruptcy could be in jeopardy.
- Missing Repayment Plan Payments or Making Payments Late
Missing a payment on your repayment plan or making a payment late is a common mistake that can put your case at risk.
- Taking on New Debt without Court Permission
Many Chapter 13 debtors do not realize that they cannot simply take on new debt during the period of their repayment plan. In order to take on new debt, you will likely need court permission. Without permission, you may be violating the terms of your bankruptcy case.
- Failing to Account for Increases in Property Taxes and Other Yearly Adjustments
Your repayment plan, and your personal budget, need to account for potential annual increases in payments like property taxes. You can avoid this common mistake by working closely on your repayment plan and budget with your bankruptcy lawyer.
- Forgetting to Discuss Issues with Your Bankruptcy Attorney
When any questions or concerns arise, it is critical to discuss them with your bankruptcy lawyer. Many debtors make the mistake of keeping issues to themselves, assuming they do not need legal advice or that the issue is not very important. Doing so may ultimately put your case and your discharge at risk.
Contact a West Palm Beach Bankruptcy Attorney for Assistance Today
When you are putting together the details of your proposed Chapter 13 bankruptcy repayment plan, it is critical to work closely with an attorney and to be realistic and reasonable about your ability to complete the terms you are proposing. In the event you cannot complete your Chapter 13 repayment plan due to a change in circumstances, it may be possible to modify the terms so that you have a lower monthly payment or to convert your bankruptcy to a Chapter 7 case. For assistance with any aspect of your Chapter 13 bankruptcy, you should get in touch with one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller. Our firm can assist you in preparing for a Chapter 13 bankruptcy or handling any issues that arise in a Chapter 13 bankruptcy in progress. Contact us today for more information.
Source:
law.cornell.edu/uscode/text/11
