Why You Have to Make the Payments in a Chapter 13 Bankruptcy
Transcript:
Hi, I'm Matt MacArthur, bankruptcy attorney at Clear Counsel Law Group.
I recently met with a client who is considering filing for chapter 13 bankruptcy, and they came in for their consultation, and they were concerned that they wouldn't be able to afford the monthly plan payments that are required in a chapter 13 bankruptcy, and the question was presented to me, "What happens if I can't make the payments, if I'm unable to afford the payments?"
Part of the deal with filing for chapter 13 bankruptcy is you have to make scheduled monthly payments to the court, and the court then takes that money and in turn, makes distributions to creditors, and pays administrative fees associated with your chapter 13 case. If you're unable to make those monthly payments, the court will eventually dismiss your case. That's just the way chapter 13 bankruptcies work, and it's part of the deal. If you can't make the payments, you can't do that kind of bankruptcy.
Bottom line, what that means, is when your case is dismissed, it puts you back in the situation you were in before filing for bankruptcy. Creditors are no longer prevented from contacting you directly, and you'll have to deal with each of your creditors on a case by case basis as they may or may not contact you.
You may have other options besides filing for chapter 13 bankruptcy. If you're afraid that you may not be able to afford the monthly payments, it may be a good indication that chapter 7 is a more appropriate path for you to pursue in the bankruptcy world, or there may be other avenues that you can pursue, such as debt settlement negotiations, or debt consolidation options. If you are thinking of filing for chapter 13, and you are concerned about your ability to make the payments, please meet with an experienced bankruptcy attorney, and they'll let you know exactly how much they would anticipate your monthly plan payments being to the court, and talk to you about real options outside of chapter 13 bankruptcy that may be an appropriate path for you to take.
My name's Matt MacArthur, I'd be happy to meet with you to discuss this issue if it's something that's currently in front of you and pressing on your mind. Please come in and meet with me and we'll talk about your different options.
