Now, Chapter 13 bankruptcy does have pros and cons. Also, it's good to understand WHY you are considering Chapter 13 bankruptcy and not Chapter 7 bankruptcy. If you meet with a bankruptcy attorney who just discusses filing a Chapter 13 bankruptcy, it may be helpful to also ask about Chapter 7 bankruptcy.
Some people keep all their assets and file a Chapter 7 bankruptcy, which can be cheaper and faster.
The Chapter 13 Bankruptcy Stories
Let’s go through a few different stories to give you a sense of what could happen.
Please note again that this is not legal advice, and we are taking different individual experiences that we have not been able to confirm.
Story #1: Increase Income Making Plan Payment Unaffordable.
One of the biggest stories I hear the most often here is when someone's alleged Chapter 13 bankruptcy plan payment goes up due to extra income or another circumstance.
In one instance, the individual paid off his vehicle, and he mentioned that his Chapter 13 plan payment increased to a point that was too much for him to handle.
Story #2: Plan Modifications
I spoke with another individual recently who allegedly had that each year, her Chapter 13 bankruptcy attorney would modify her plan payment and charge her an additional ~$1,000 for the plan modification.
She couldn’t afford the additional plan modification, but she mentioned that she had no choice because she didn’t understand how things worked in the legal system.
Some Chapter 13 attorneys may receive their entire fee before discharge.
Story #3: “Property Left Off The Case”
This individual allegedly had 60% of their take-home pay taken each month because an examination left $2,000 in property off their case. Essentially, the case was potentially going to be dismissed, but they could convert it from a Chapter 7 to a Chapter 13 case.
Unfortunately, these individuals took out high-interest-rate loans to make the monthly payments, leaving them penniless.
What made matters worse is that this individual didn't seem like they were able to get in touch with their attorney and come in for an appointment.
What were they looking to do? They were looking into converting from a Chapter 13 to Chapter 7 bankruptcy.
Story #4: Planning for Increased Payments
This lady allegedly had changed companies after being laid off, which resulted in insurance premiums that quadrupled.
Her family also had increasing out-of-pocket costs. She mentioned that the trustee would also want to take the $197 monthly car payment that ended, meaning that after you pay off your car, the trustee may want to take those additional funds for the unsecured creditors.
Story #5: Notice of Dismissal 30 Days Before a 5-Year Chapter 13 Plan Completion.
In this story, Lesa allegedly was almost done with a 5-year-old bankruptcy but received a motion to dismiss due to the lack of feasibility with a hearing date. The individual believed that some creditors, such as a payday loan company and Credit One, were still wanting to get paid.
One individual stated that if the plan's base of creditors had been wrong from the start, someone should have corrected it.
While they may be able to piece everything together, you probably don't want to get to a place where you are facing a dismissal 30 days before bankruptcy discharge.
Should I File For a Bankruptcy Quiz
There are potential costs, credit report implications, and duration implications of filing Chapter 13 bankruptcy vs. pursuing a bankruptcy alternative.
As such, you can take the informational Should I file bankruptcy quiz below to help you compare Chapter 13 bankruptcy vs other options. The calculator will estimate each option's cost, duration, and potential pros and cons. Please note that this is for informational purposes based only on the financial data you enter.
5 Steps To Potential Avoid a Chapter 13 Horror Story
There are specific steps that you can take to help you avoid Chapter 13 ruining your life.
- Your payment plan is essential, and this free Chapter 13 Calculator emulates the Chapter 13 bankruptcy forms to help you estimate your Chapter 13 plan payment and compare your options.
- Understand 11 bankruptcy alternatives, including credit counseling, payoff planning, debt negotiation, and home equity co-investment (a newer opportunity).
- Perform a thorough analysis of Chapter 13 bankruptcy vs debt settlement. If you choose debt negotiation, just be careful which company you select. It may be a great option, but many companies are not upfront about fees charged in initial calls.
- Ask your attorney whether there are any additional fees that you would incur if you decided to file Chapter 13 bankruptcy. You can ask for that in writing. Look up Google Ratings and Reviews of your attorney to confirm that the individual has a strong customer experience, regardless of when the challenges occur in the Chapter 13 plan.
- Create a Budget Of Different Things That Could Happen in the Next 3 or 5 Years. Do you pay off a car that may increase your plan payment? Will you get a bonus or will your income increase?
Other Chapter 13 Bankruptcy Stories:
Let’s cover a few more Chapter 13 bankruptcy stories I found on the web that you may consider before filing for Chapter 13 bankruptcy.
1. Chapter 13 Pre-Filing Homestead Exemption
2. Two Jobs, Single Mother, Pretty High Payment
3. Chapter 13 Bankruptcy Nightmare (House Equity and Inherited Property)
Conclusion
Many individuals have received relief from their debt through a Chapter 13 bankruptcy. In this study, 38.8% of individuals have received Chapter 13 bankruptcy discharge from a recent study. Many individuals decide to go with a Chapter 13 bankruptcy attorney. The discharge rate for those who filed pro se was only 2.3% of Chapter 13 bankruptcies filed without an attorney from the same study.
Hopefully, these Chapter 13 bankruptcy horror stories will help you understand whether Chapter 13 bankruptcy is right for you. If you decide it is not, you can research debt settlement and Chapter 7 bankruptcy, which are alternatives.
If you'd like to speak with someone, our team is here to help. You can call or text us at (310) 307-5134 for a free consultation.
