When you file for Chapter 13 bankruptcy, the critical component is completing the Chapter 13 repayment plan. Making your payments on time can result in the successful completion of your bankruptcy. However, failing to pay the court on time each month can cause your bankruptcy to be dismissed.
To avoid these risks, follow these tips to complete your Chapter 13 repayment plan successfully.
What Is a Chapter 13 Repayment Plan?
In a Chapter 13 bankruptcy, you create a repayment plan to pay back your creditors some of the money you owe. You work closely with your bankruptcy attorney to establish this, as it must include specific details. For example, it must reasonably repay the debt to each creditor. It also must be a plan you can afford. You need to submit a monthly payment to the court throughout the length of the 3-5-year plan. If you cannot afford these payments, your bankruptcy can be dismissed. Your plan also needs to be approved by the court. Your attorney will ensure it meets the criteria and will likely be approved.
Repayment Plan Mistakes to Avoid
When pursuing a Chapter 13 bankruptcy, it’s essential to complete your repayment plan. To be successful, use these tips!
1. Make Sure You Know and Understand Your Repayment Plan
One of the most important aspects of a Chapter 13 bankruptcy is to know and understand your repayment plan. You need to know the terms and what they mean to you. That includes knowing what amount you need to pay each month and to whom you need to pay it. Failure to get the right amount of money to the court-appointed trustee by the correct date each month can result in getting your bankruptcy dismissed.
2. Know Your Budget
When you create your Chapter 13 repayment plan, you must make an on-time monthly payment throughout the 3 5- year plan. To ensure you can make these payments, you must look deeply at your finances and create a budget—account for your bills and obligations, including housing, car payments, food, and other necessities. Then, determine what you can afford to pay towards your plan and what money you have remaining to spend each month.
3. Make Payments on Time
We know we’ve already mentioned this several times in this blog, but it’s worth saying again – you must make your payments on time. Turning in the money late or missing a payment can result in your bankruptcy being dismissed. To avoid this, you should set up an automatic payment plan. If, for some reason, you cannot make a payment or know you will be late, you need to discuss the circumstances with your attorney and the trustee as soon as possible.
4. Request a Modification If Needed
Suppose your financial situation drastically changes, and you cannot afford the agreed-upon monthly payment outlined in your repayment plan. In that case, you need to request a modification to the plan. It would help if you worked with your bankruptcy attorney to address your financial changes and determine the best course of action.
5. Be Responsible
When working through your 3-to-5-year repayment plan, tightening your belt and being extremely financially responsible is essential. You must prioritize making the repayments and accounting for your living expenses. You should avoid making large purchases you cannot afford and always work closely with your bankruptcy attorney.
Need a Chapter 13 Repayment Plan? Contact a Bankruptcy Attorney
When filing for Chapter 13 bankruptcy, you must ensure you make all the necessary payments as assigned through your repayment plan. You need to hire an experienced attorney to help you through the bankruptcy process and ensure you make the required payments. Our attorneys can help you determine what steps you need to take. We will also clear up any confusion you might have after your bankruptcy is final! Don’t let debt ruin your life—contact us online or call (405) 529-9377 for a free case review.