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What To Do If You Can’t Live On A Chapter 13 Budget

Chapter 13 BudgetYour Chapter 13 bankruptcy budget is like a pair of pants with an elastic waistband – it expands and contracts as your needs change.

In order to fit in the first place, you’re going to need to sit down with your bankruptcy attorney and figure out your true monthly expenses.

Lots of my bankruptcy clients have no idea how much they spend on gasoline each month. When the tank goes dry, they hit the gas station and fill up.

Ask them how much it comes to on a monthly basis and they’re going to throw me a guesstimate at best.

In the real world that’s not a problem. Here, it’s another issue entirely.

I have no idea how much I spent on gasoline last month either. But I’m not contemplating a Chapter 13 bankruptcy for myself – if I were, you can be sure I’d be looking a lot more closely at those numbers.

Once that’s done, we can look at the Chapter 13 Plan payment required under the means test.  If you don’t have enough to cover the required payment, you’ve got two choices:

  1. don’t file for Chapter 13 bankruptcy; or
  2. start cutting monthly expenses until you’ve got enough left over each month to make the payments.

Simple yet not so easy.

This isn’t a solution that fits everyone.  Chapter 13 bankruptcy requires good budgeting skills, a dedication to money management, and a strong desire to make the Plan work.  Either you’ve got those skills, are willing to develop them, or need to face reality.

You can read all the information about bankruptcy you can find online, but you know it’s not going to help you make a final decision.

How long your Chapter 13 Plan will run, how much you’ll need to pay, and how to make your budget work in the real world are the main reasons for sitting down with a lawyer who knows his or her way around the bankruptcy system.

Your alternative is to file a Chapter 13 bankruptcy without any sense of whether you can make it work.  When it fails, you’ll be left with nothing more than a dismissed bankruptcy case and a mountain of debt – and that’s probably not what you’re looking for.

Image credit:  wallyg

By |February 18th, 2013|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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