CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Why Might Chapter 13 Be Unsuccessful?

Why Do Chapter 13 Bankruptcies Fail.Chapter 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. Repayment 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 Bankruptcy Law Office of Robert M. Geller at 813-254-5696 or schedule an appointment to discuss your situation.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

Are Medical Issues Forcing You Into Bankruptcy?

Many Americans wind up in debt because of medical bills. One of the most common reasons for filing bankruptcy in...
Read More

Law Offices of Robert M. Geller, P.A. Congratulates Danielle Austin For Receiving the Patriot Award from the United States Department of Defense

Award Recognizes Support of Guard and Reserve Members Who Work for the Organization Tampa, Florida, June 29, 2021 – The...
Read More

Is Your 401k or Other Retirement Savings at Risk in Bankruptcy’s Liquidation of Assets?

If you’ve spent years saving for retirement, putting that money at risk when you file for bankruptcy is likely one...
Read More

Tips to Help You Protect Your Assets When You File for Bankruptcy

One of the most intimidating aspects of filing for bankruptcy is protecting your assets. Worrying about whether bankruptcy puts their...
Read More

How Does Bankruptcy Affect Vehicle Ownership? What Assets Can You Keep through the Bankruptcy Process and Does It Affect Your Car?

Many people struggling financially avoid filing for bankruptcy because of concerns about losing important assets like their vehicles. The good...
Read More

Is There a Legal Way to Hide Assets When You File for Bankruptcy?

Filing for bankruptcy can be an overwhelming experience. The relief you receive when you file helps you feel better about...
Read More

Do Bankruptcy Trustees Take Your Savings? What is Considered an Asset in Bankruptcy and How Does It Affect the Money You’ve Saved?

Bankruptcy trustees gain access to a variety of your assets when you file. But what is considered an asset in...
Read More

Can Filing for Bankruptcy Help You Protect Your House?

fiHow filing for bankruptcy affects your home is one of the greatest concerns people have when they consult with bankruptcy...
Read More

Should I Refinance a Student Loan I Can’t Discharge in Bankruptcy?

Student loan debt is overwhelming many people. Could refinancing be the answer to help you avoid bankruptcy if your student...
Read More

Can Student Loan Consolidation Help You Avoid Bankruptcy?

One of the most common questions people have when they consider bankruptcy is “can student debt be discharged in bankruptcy?”...
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 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