Things To Consider Before Filing For Chapter 13 Bankruptcy

If you are aware of some of the benefits of filing for Chapter 13 but have a few questions about the process of using Chapter 13 to file for bankruptcy, simply continue reading to learn important information that you need to know before filing for Chapter 13. In order to ensure that you are well informed of both the risks and advantages of opting to use Chapter 13 in order to decrease your debts.

Most Important Aspects To Keep In Mind Before Filing For Chapter 13 Bankruptcy

Percentage Of Debt You Pay Back In Chapter 13

The amount of debt that you can expect to pay if you choose to file for Chapter 13 can vary greatly and will depend on a number of factors. Examples of these include your expected income and your assets. While some individuals are expected to pay 0% of their unsecured debts such as their credit card debts and their personal loans, other individuals may be ordered to pay 100% of their unsecured debts. However, a typical example of how much an average individual can expect to pay is 30% of their unsecured debts.

If you were ordered to pay 30% of your unsecured debts as part of your bankruptcy plan, you would find it easier to pay off your secured debts as you would have wiped 70% of your unsecured debts away. Which will significantly decrease your financial burden. It may be worth noting that it’s extremely rare for individuals to be ordered to pay less than 10% of their unsecured debts.

Interests & Taxes

One of the benefits of wiping away a large chunk of your unsecured debts is that you will avoid paying a lot of extra money in interest and taxes. As if you were to delay or forgo filing for bankruptcy, the interest which you would be expected to pay on your loans would only increase as you would fall further and further behind in your loan repayments. Even the unsecured debts which you can’t avoid paying, won’t increase in interest during your 3-5 year bankruptcy period. So that when your bankruptcy term comes to an end, you won’t have to catch up on paying any interest which you would have missed as the interest on the unsecured debts that you’re still expected to pay would have been frozen for the entire term of your Chapter 13 bankruptcy.

Unavoidable Debts

There are several types of debts that you won’t be able to get rid of. For example, you won’t be able to stop paying alimony payments and child support payments. You’ll also be required to make regular payments towards your secured loans. One of the best examples of a secured loan is the mortgage on your property.


While you may have to keep paying money towards paying off your secured debts such as your mortgage or your car repayments, by doing so, you’ll be able to keep more of your assets. So if you don’t want to lose your family home or car, it’s a wise idea to file for Chapter 13 if your debts have become unmanageable and you don’t want your car to be repossessed or for your home to be marked for foreclosure. As well as being able to keep your home and car, you’ll also be able to retain your personal possessions and furniture, your clothes and accessories, and your jewelry. As well as any important family heirlooms which you may have in your possession.

Your Trustee

Learn Imperative Information To Start Your Chapter 13 Bankruptcy Case

It will be the responsibility of your trustee to ensure that all of your secured loan payments are made on time. As part of their job will be to monitor your bank accounts on a regular basis to ensure that you’ve topped up your bank accounts with enough money to pay all of your secured debt payments. For example, your trustee may check that you’re continuing to add funds to your account every month from your monthly income so that they’ll be able to continue making their scheduled payments.

Do keep in mind that your trustee may also check your accounts in order to ensure that you haven’t tried to hide assets from the bank, which could’ve made you ineligible to file for Chapter 13 or which should be seized in order to pay off some of your debts. So don’t be alarmed if your trustee decides to keep tabs on your financial accounts, including your bank accounts.

Paying Your Trustee

One factor that most individuals who file for Chapter 13 don’t think of is that they will have to pay their trustee a set percentage of all of the funds that their trustee uses to pay their debts. This does mean that the higher your debt is, the more money that you’ll end up paying to your trustee for their services.

Risks Of Paying Off Your Bankruptcy Early

While you may be tempted to end your bankruptcy period early, if you do so you will be required to pay the full amount of your unsecured debts that you would’ve had permanently wiped if you were to wait until the end of your bankruptcy period. So it’s well worth waiting until you have completed your bankruptcy plan in order to get on top of your debts and to set yourself up for an easier financial future.

Rules & Regulations

If you plan on starting a business or investing, you’ll need to seek court permission. However, do keep in mind that bankruptcy courts don’t want to control your every move and it’s highly likely that the court will approve your request. You’ll also have no trouble leaving the country for a vacation, so long as you are able to afford your vacation while still playing for all of your scheduled loan repayments.


If you were searching for detailed information on the process of filing for Chapter 13, hopefully, you found the information above valuable. For more information, it’s best to get in touch with an experienced bankruptcy lawyer.

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