Filing for bankruptcy can often seem like the ideal solution to solving a serious issue with debt. Chapter 13 bankruptcy has been considered as a strong alternative to Chapter 7 liquidation. With chapter 13 bankruptcy customers can retain all of their non-exempt property and use applicable disposable income to pay off a portion of their unsecured debts. Not everyone will qualify for Chapter 13 bankruptcy, however. Around 75 to 80% of applicants with Chapter 13 bankruptcy drop out before completing their plan. Some of the main roadblocks to completing a Chapter 13 bankruptcy claim include:
Disruptions in Disposable Income
Chapter 13 bankruptcy assumes that there is a disposable source of income and a steady stream of expenses. As the debtor continues to pay their bills, their disposable income will remain to go to their unsecured credit accounts. Over a 3 to 5 year plan, it can be difficult to retain the same income. Many debtors end up losing their jobs or even suffer reductions in hours. With these types of challenges, it can be next to impossible for them to retain their repayment plan.
Inadequate Resources to Begin With
When many people file for Chapter 13 bankruptcy it’s in an effort to stop a foreclosure or repossession. Filing for Chapter 13 bankruptcy does not immediately reroute extra cash flow so that you have an influx of income to manage your debts. It may still be difficult for you to make monthly payments on your car loan or mortgage while repaying your debts on a repayment plan. It may still be difficult for you to make monthly payments on your car loan or mortgage while repaying your debts on a repayment plan. Coming up with a proper budget that’s realistic before filing for Chapter 13 bankruptcy is important.
A sudden illness can often make it difficult for a person to work or continue earning the same income. Illness or an injury can also lead to a series of unforeseen medical expenses that can eat into disposable income.
If you are having trouble with your repayment plan or you are considering your options in relation to your Chapter 13 repayment plan, consider contacting our bankruptcy attorneys today to learn more about your options.
This post was written by Trey Wright, a bankruptcy attorney in Tallahassee, FL. Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation. Not everyone will qualify for Chapter 13 bankruptcy, however. Around 75 to 80% of applicants with Chapter 13 bankruptcy drop out before completing their plan. Some of the main roadblocks to completing a Chapter 13 bankruptcy claim.