Chapter 13 Bankruptcy Horror Stories

Avoid Chapter 13 bankruptcy horror stories. Can Chapter 13 ruin your life? See 5 stories and 5 steps to avoid a nightmare bankruptcy
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.

Are you considering a Chapter 13 bankruptcy? Do you want to understand Chapter 13 bankruptcy horror stories, and if Chapter 13 bankruptcy can ruin your life? You are not alone. Chapter 13 bankruptcy and often takes 3 to 5 years to finish, so it's helpful to understand what may happen. While many people have success with Chapter 13 bankruptcy, you may also want to consider the pros and cons to avoid Chapter 13 dismissal.

The purpose of this article is to:

1) Share anonymous Chapter 13 bankruptcy horror stories

2) Share 5 steps on how to potentially avoid a Chapter 13 bankruptcy horror story if your bankruptcy attorney says that Chapter 13 is right for you.

3) Provide a free bankruptcy quiz that can help estimate cost and duration of Chapter 13 and Chapter 7 bankruptcy.

Let's get started.

Table of Contents

Now, Chapter 13 bankruptcy does have pros and cons. Also, It's good to understand WHY you are considering Chapter 13 bankruptcy, and not a Chapter 7 bankruptcy. If you meet with a bankruptcy attorney that 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 dollars 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 of an examination that left $2,000 in property off their case. Essentially, the case was potentially going to be dismissed, but they were able to convert from a Chapter 7 to Chapter 13 case.

Unfortunately, this individual took out high interest rate loans, so they could make the monthly payments, but that left 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 out of pocket costs increasing. 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 lack of feasibility with a hearing date. What the individual believed is that some creditors were still wanting to get paid such as a payday loan company and Credit One.

One individual stated that if the plan base of creditors was wrong from the start, then someone should have corrected it.

While it seems like 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 Bankruptcy Quiz

There are potential costs, credit report, 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 that can help you compare Chapter 13 bankruptcy vs other options. The calculator will estimate cost, duration and potential pros and cons of each option. Please note that this is for informational purposes only based on your financial data that 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.

  1. Your payment plan is very important, 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.
  2. Understand 10 bankruptcy alternatives including credit counseling, payoff planning, debt negotiation, and home equity co-investment (a newer opportunity).
  3. Perform a thorough analysis between 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.
  4. 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 strong customer experience, regardless of when the challenges occur in the Chapter 13 plan.
  5. 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 your income will increase?

Other Chapter 13 Bankruptcy Stories:

Let’s cover a few more Chapter 13 bankruptcy stories that I found on the web that you may consider before filing 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 individual have received relief from their debt in the form of a Chapter 13 bankruptcy. In this study, 38.8% of individuals have received Chapter 13 bankruptcy discharge from a recent study. That said, many individuals decide to go with a Chapter 13 bankruptcy attorney. In fact, 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 provide some helpful information to understand whether Chapter 13 bankruptcy is right for you. If you decide Chapter 13 bankruptcy is not right for you, you can research debt settlement and Chapter 7 bankruptcy, which are  alternatives. 


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