Most people are familiar with the idea of the Chapter 7 bankruptcy, which requires that you surrender assets above a certain minimum to go toward paying off your debt, and the rest of your debt is effectively wiped out. However, a Chapter 13 bankruptcy is different, and it's often misunderstood. A Chapter 13 bankruptcy is something like a very involved payment plan, intended to get your debts paid off and your finances back on track within a few years without giving up your assets. In order for a Chapter 13 bankruptcy to work, you have to be disciplined enough to stick with a strict payment plan. This can be hard for many people – around two thirds of Chapter 13 payment plans fail. Here are some tips that can help you manage your Chapter 13 bankruptcy successfully.
Consider Payroll Control
If you're not self-employed or unemployed, one of the best things that you can do for yourself during a Chapter 13 bankruptcy is to use the payroll control option. Payroll control means that your Chapter 13 payments are automatically deducted from your paycheck before you even receive it. You don't have to worry about setting aside the money and making the payment yourself.
There are some downsides to this option. It means making your employer aware of your bankruptcy status, which you may find embarrassing, and it also means giving up some of your control over your own finances. But the benefits of this option tend to outweigh the negatives. It will be easier to adjust to your new budget if you don't have to see or consider the money that you'll be paying on your Chapter 13 plan, and it ensures that your payments will always be made on time.
Monitor Your Own Progress
A Chapter 13 bankruptcy can last for three to five years. That's a long time to expect everything to run smoothly and without a hitch. Ask your attorney how you can keep up with and monitor your bankruptcy case online. That way, you can keep track of who is being paid and when, and if there's a mistake, you can take steps to correct it immediately. You're the person who is most invested in completing your bankruptcy successfully, so you're likely to spot an error more quickly than someone who has less of a personal interest in your case.
It will help to keep copies of all relevant paperwork. Trustee payments, mortgage payments, pay stubs, and any paperwork from your lawyer or from the court should all be saved and organized. In the event of a mistake, you'll want documentation as evidence that you've been making your payments and meeting your obligations.
Communicate With Your Attorney
Your dealings with your bankruptcy attorney shouldn't end just because the court confirms your payment plan. Your bankruptcy attorney is there to help throughout the entire Chapter 13 bankruptcy process.
That means that if you lose your job and can't make your payments, if your family has unexpected medical expenses to deal with, or if you need to make a large purchase like a new car, you should contact your attorney right away. An attorney like those at Wagner Law Office PC can help you figure out how a change in circumstances will affect your Chapter 13 plan and how to avoid failure, if at all possible. But your attorney can't help you if you don't let them know that there's a problem. It's up to you to keep the lines of communication open.
Getting through a Chapter 13 bankruptcy can be hard, but when you reach the end of the plan with your debts paid off and your assets intact, you'll see that it was worthwhile. In the meantime, it's important to do what you can to make sure that your plan succeeds.
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