Reasons why Chapter 13 Bankruptcies Fail

As a Baltimore bankruptcy lawyer, we know that many people file for a Chapter 13 bankruptcy case in order to save some properties from foreclosure. As you may already know, Chapter 13 bankruptcy would take much longer to settle than Chapter 7. But, if you can pull it off, then the agony of having to pay monthly for 3 to 5 years will all be worth it.

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However, there have been many instances when Chapter 13 bankruptcies fail. In fact, 66% of cases fall through even after passing tests and getting approval from the judge. And because it requires a long time to complete, failure would take a heavy toll on the debtor. So if you ever find yourself filing for bankruptcy, make sure to keep some of the most common reasons in mind of why many Chapter 13 cases fail so that you are prepared for the possibilities:

Involved Emotions and Motivation. Bankruptcy is stressful for everyone. And this can lead to even stronger negative emotions like anxiety for the future. Because of this, most people that file for Chapter 13 have a hard time being calm and collected during the early stages of the case. This sometimes keeps them from completely comprehending the situation or the pieces of advice given to them by experts of the matter, such as a bankruptcy lawyer from Baltimore, Maryland. Unfortunately, if a person’s mental state early on isn’t well conditioned, then what about the next 3 to 5 years of payment that they have to endure?

Absurdly Ambitious Objectives. Again, be reminded that people usually file for a Chapter 13 bankruptcy in order to save their properties from being claimed by creditors instead of the money you owe them. Unfortunately, this in itself is already enough reason for some cases to fail. It applies when the debtor’s property’s mortgage is already too high, to begin with, or if they are already in some other existing unfortunate situations. Such happenings make all payments, with the additional dues for a Chapter 13 case, really difficult and bordering impossible to accomplish. This is especially because you’d have the deadline of 5 years to completely pay them off. So instead of clearing your debts, you’ll only end up sinking even deeper.

Inability to Save for Everyday Needs. 3 to 5 years is a long time. During the course of this period, your and your family’s needs will change. If you have kids who are growing up, then expect that they’ll be eating more and will have more lifestyle demands. These require a lot of money. Unfortunately, if you’ve filed for a Chapter 13, you won’t have enough financial allowance for unexpected expenses or mishaps, such as illnesses or job loss. You can’t have credits, major property repairs, insurance deductibles, or any other expenses that are not considered basic. This is because the Bankruptcy Code demands a Chapter 13 debtor to use all of their disposable income — aka ALL of their available money — to pay their dues within the timeframe they’ve been given to clear their debt.

Not Seeking the Help of a Bankruptcy Attorney. The Administrative Office of the US Courts has stated that about 9% of bankruptcy cases are filed without the help of an attorney. Now, if it’s a Chapter 7 bankruptcy case, then there are cases that the debtor succeeds, although this is extremely rare. As for Chapter 13 cases, however, such success stories without the help of an attorney is entirely unheard of. This is because you’ll make your creditors wait for a long time before you get to clear off your debt. And that’s not exactly a favorable situation for them. Therefore, they’ll do everything in their power to make your case’s circumstances as least unfavorable for their side as possible. So how will you manage to turn the tables if you’re not well-versed with bankruptcy and court proceedings? Your creditors will have their own lawyers, so you should have one to represent you as well to level the playing field. Without an attorney on your side, you’ll obviously be at a disadvantage.

So to make sure that you can be successful in not only filing but also clearing off your debt with a Chapter 13 bankruptcy case, contact only the best and most trustworthy experts in your area. And when it comes to Baltimore, Atty. Richard Hackerman is already the best there is. As a long-running professional in bankruptcy laws, we will assist you every step of the way when settling and filing for Chapter 13 bankruptcies. With our expertise, we’ll make sure that you don’t fall into these reasons of case failures. So don’t hesitate to contact us for any questions or concerns on legal issues via phone at 410-243-8800 or 888-243-5500. For more details about our services and other useful information for any bankruptcy concerns, feel free to browse through our website.

Bankruptcy? No problem! As Baltimore’s best bankruptcy attorney, Atty. Richard Hackerman will provide you all the legal help you’ll need for a successful escape from debt.