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How you should or should not pay through Chapter 13 bankruptcy

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By: Good Nelly
on 1st Jun,2013

A Chapter 13 Bankruptcy helps you satisfy your creditors, catch up with your bills on which you're lagging behind within a certain period of time.
How you should or should not pay through Chapter 13 bankruptcy


A Chapter 13 Bankruptcy helps you satisfy your creditors, catch up with your bills on which you're lagging behind within a certain period of time. In this type of bankruptcy, all your debts are re-scheduled so that you can at least pay only the secured amount rather than the total outstanding balance.

Once you get into the Chapter 13 bankruptcy repayment plan, you'll have to pay a specific amount each month. The amount will be disbursed amongst the following things:

1.    Secured debts such as home loans and auto loans
2.    Fees of the trustee
3.    Unsecured debts such as plastic cards and hospital bills
4.    Priority debts like alimony and tax

How you should pay through bankruptcy

If you've filed Chapter 13 bankruptcy or you're planning to file one, then here's what you must do to get rid of your debts successfully.

1. Create a budget and make payments: Formulate a budget plan in order to make regular payments to the bankruptcy trustee. Keep it in mind that you need to make timely payments as to prevent your bankruptcy case from being dismissed.

2. Monitor your payments each month: Calculate how much you're paying every month. Keep a tab on the number of payments you're making within a certain time period. This will help you monitor your financial progress. You can find out how much you need to pay and when to successfully complete the repayment plan.

3. Speak the truth to your attorney: Keep it in mind that your attorney is here to help you out. Give the proper details about your finances to your attorney. Give the proper details about your assets and liabilities to your attorney. This is not the time to think about your privacy. Your bankruptcy attorney won't be able to help you out if he/she doesn't get the actual picture. Moreover, if the bankruptcy trustee finds that you've not disclosed the truth, then the your case may dismissed at any time.

How you should not pay through bankruptcy

Check out the 4 things you must never do when making payments through Chapter 13 bankruptcy.

1. Don't use your 401K account: Never use your retirement savings account to carry on with your payments.  Don't withdraw money from your 401k accounts or the IRA to complete the repayment plan. If you do so, then you'll put your retirement years at risk. Plus, you'll have to pay penalties and tax.

2. Don't miss your payments: Avoid missing out your payments even for a single month. You may get tempted to miss a month's payment to fulfill some other financial commitments. Resist yourself from succumbing to your temptation for it will complicate your financial situation.

3. Don't break the agreement: Try to pay as per the repayment plan. Don't pay less than what has been agreed under the bankruptcy plan. Don't try to save more than what the bankruptcy plan entails you. If you try to pay less, then your bankruptcy case may get dismissed.

4. Don't spend more than what is required: If you feel that you'll get out of debt sooner by making extra payments, then you're wrong. You may not yet be able to complete the repayment plan quickly. Plus, you may end up spending more than what is required. If you really wish to spend more, then just consult your bankruptcy attorney first.

Finally, make necessary cuts in your budget and spend your dollars wisely. Don't purchase luxury items or give out a loan more than $600 within 90 days of bankruptcy filing. The bankruptcy trustee may recover the money and distribute it amongst your creditors.


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