CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Why Might Chapter 13 Be Unsuccessful?

failChapter 13 Bankruptcy Failures

Filing for bankruptcy can be one of the smartest decisions you ever make and bring massive relief when you’re dealing with financial challenges. But it only feels that way if your case is successful.

And when it comes to filing for Chapter 13 bankruptcy, success is easier said than done.

The majority of Chapter 13 cases fail. They meet the criteria after the bankruptcy means test and they are approved by the bankruptcy court to move forward, but the debtor never gets the discharge they so desperately need.

In most cases, failure is due to one of several reasons:

  • Life circumstances
  • Not having the guidance of an experienced bankruptcy attorney
  • Over-ambition
  • Too stringent a calculation for payments
  • Need for bankruptcy goes away

Let’s take a look at a few of these in detail.

Life Circumstances

Chapter 13 bankruptcy requires a length commitment from the debtor. Re-payment plans are three to five years and while that might not seem like a long time if you’ve been dealing with financial struggles for decades, a lot can change in that time.

It is possible to get a Chapter 13 case switched to a Chapter 7 if your income is drastically reduced during the course of your repayment plan, so it’s not as if your bankruptcy is a total failure, but you need to take action and seek advice from a bankruptcy attorney if and when there is a change.

For more information about converting a Chapter 13 bankruptcy to Chapter 7, check out this information from NOLO.com.

Filing for Bankruptcy without an Attorney

One of the biggest mistakes you can make when you decide to file for bankruptcy is going it alone. You have the legal right to file without an attorney, but there’s a high probability your case will not succeed.

Over-Ambition

Another common mistake with Chapter 13 is filing this chapter to protect your house when your ownership of that house is already doomed. If you’re living in a home that is just too expensive and you cannot now nor will you be able to afford the mortgage payments in the near future, there’s no sense trying to hold onto that house, even if you have the option of doing so. The same goes for other assets you aren’t able to afford. Bankruptcy is about getting clear and making smart financial decisions, so don’t put yourself at a disadvantage right out of the gate.

Stringent Calculation of Payments

Under the Bankruptcy Code, all of your disposable income goes to repaying creditors for up to five years. And when it comes to Chapter 13 bankruptcy, all means all. Every last penny based on a formula created by lawmakers.

What are the odds this one-size-fits-all formula is going to fit all?

Not only does it make it so you have absolutely nothing to save leftover after paying creditors, but you also have nothing to put toward unexpected expenses. Any smart financial counselor would encourage you to live below your means and focus on the future, but Chapter 13 debtors are expected to spend every dime they make.

This is a formula for failure.

Bankruptcy Need Evaporates

The final reason Chapter 13 cases don’t succeed? They don’t need to succeed. So it’s not all bad news here.

Some people begin the Chapter 13 process only to discover they don’t need it in the long run. They enjoyed the protection of the automatic stay while they re-negotiated a debt or dealt with a specific situation, but ultimately didn’t need to go through the entire process.

In some cases, what initially began as a Chapter 13 becomes a Chapter 7 before too much progress is made on the case. Bankruptcy is still needed, but the long-term commitment never becomes an issue.

If you think Chapter 13 might be right for you and you want to avoid the problems that so often cause cases to fail, we can help. Contact the Bankrupcty Law Office of Robert M. Geller at 813-254-5696 or schedule an appointment to discuss your situation.

Archive

Tampa Bankruptcy Law Blog

What to Do If a Debt Remains on Your Credit Report after Bankruptcy: Why You Need to Be a Detective When It Comes to Credit Reporting Errors

Credit Reporting Errors If you’ve noticed something on your credit report that doesn’t belong there, you aren’t alone. Credit reporting...
Read More

What Happens to the Property I Lose in Bankruptcy? Some Bankruptcy Assets Might Be Protected in Your Favor

Bankruptcy Assets One of the biggest fears people have about filing for bankruptcy is losing their possessions. Many people avoid...
Read More

3 Bankruptcy Tips To Prevent Your Case From Going Off The Rails

Bankruptcy Tips Bankruptcy is one of the most powerful tools you have for improving your financial situation. Unfortunately, it sometimes...
Read More

Can I File for Bankruptcy from Home after a Creditor Files a Lawsuit against Me?

Bankruptcy from Home Have you been served with notice that a creditor is suing you for repayment of a debt?...
Read More

Can I File for Bankruptcy without My Spouse?

Bankruptcy without My Spouse Bankruptcy is an option for single people or married people to get their finances back on...
Read More

Am I Eligible for the Same Benefits If I File Bankruptcy from Home?

Bankruptcy at Home Filing for bankruptcy is one of the best ways to get relief from debt. Not only does...
Read More

Help! A Credit Card Company Won a Judgment against Me!

Judgment Creditor Having a credit card company file legal action against you is nerve-wracking. It only gets worse if they...
Read More

How We Can Help You Improve Your Credit Score after Bankruptcy

Improve My Credit Score A solid credit score is an important tool that helps you in many ways. Unfortunately, just...
Read More

3 Ways You Can File for Bankruptcy

Ways to File for Bankruptcy Filing for bankruptcy is one of the best ways for many people to get their...
Read More

5 Benefits of Filing for Bankruptcy from Home

Filing from Home Filing for bankruptcy from home is one of the best ways to get your financial life back...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

NACBA Logo comodo avvo1 avvo2 avvo3 LEA BBB Logo RG Seal

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions