Article written by Columbia, SC bankruptcy lawyer Daniel Stone
National figures show that a high percentage of Chapter 13 bankruptcy plans fail. The reasons for this are varied but include: loss of employment, demotions at work, death, sickness, car problems, and mortgage issues. That being said, there are some simple ways that may increase your chances of being successful in your chapter 13 plans. The first way is to agree to a wage order. A wage order is a way in which you can pay for your trustee payment through your paycheck at work. Once you agree, the Chapter 13 trustee submits a proposed order to the bankruptcy court for approval. Once the signed order is executed, it is sent to your employer requiring them to send enough funds out of your paycheck to make your monthly pan work. Statistics show that debtors who agree to the wage orders see a significant increase in likelihood that there plans are successful because the payments are made each month by the employer without the debtor having to think about it. Please note that chapter 13 trustee highly recommends that you continually monitor your pay checks to make sure the correct amount is being sent each month. In addition, it is the debtors responsibility to make the first trustee payments until they see it coming out of their check.
The second simple way to increase your chances of plan success is live within your budget. We are all guilty at times of spending money when we know we shouldn’t. However, being in a Chapter 13 bankruptcy is a way for debtors to save their homes, cars, and wipe out potentially thousands of dollars of unsecured debts. In exchange for this benefit, debtors are required to make a monthly plan payment that conforms to a strict budget plan. Taking a month or two vacation from this plan can derail you from being successful.
Third, make sure you monitor all court orders, trustee letters, and stay in contact with your bankruptcy attorney. I have had a few bankruptcy clients do everything they were required to do in their chapter 13 bankruptcy plan except for reading their mail or returning their attorney’s calls. Make sure you open all bankruptcy correspondence and if you do not understand, make sure you call me.
Finally, bankruptcy attorneys have some ways to help their clients when they have a small hiccup during their plan. For example, I can file a motion once during your bankruptcy plan to put 2-3 months of payments towards the back of your plan. If you come down with a sickness or have an unforeseen emergency, this motion can be a great benefit.