Important Points to Know If You're in a Chapter 13 Bankruptcy

Nick-GajewskiIf you’ve filed a Chapter 13 bankruptcy case, there are certain aspects of the case you should be aware of in daily life.  The one key point to keep in mind while your Chapter 13 case is active is that the Court will closely monitor your budget and financial situation.

Sales and Transfers of Property

Just about any sale or transfer of property has to be approved by the Court beforehand.  And don’t forget, the Court describes “property” as any real estate or personal property. So any vehicles, boats, motorcycles, or any “big ticket” item has to be approved by the Court.  Further, in most cases the Court will require any profit made from the sale to be paid into the Chapter 13 case.  Part of the purpose behind filing a Chapter 13 case, as opposed to a Chapter 7, is that you keep the property you have.

Purchases Using Credit

In addition to sales of large items, any purchase that would require the use of credit must also be approved by the Court beforehand.  Any financed vehicle purchases, refinances of existing loans, or new loans must be reviewed by the Court to determine if you have a valid reason for the use of credit and if you can afford the credit without jeopardizing your Chapter 13 case or your current household budget.  Local jurisdictions may have additional requirements, so you should consult with your attorney before attempting to use any credit.

Changing Your Monthly Payment

Finally, your Chapter 13 payment plan was confirmed at the beginning of the case.  At that time the Court reviewed your budget and approved your Chapter 13 payments based on that household budget.  If you’re going to ask the Court to change your monthly payment, then you’ll need to show proof that you’ve had some material change of circumstances to justify the change in your monthly payments.

So, What's the Advantage?

With all of these restrictions, you may be wondering “Why am I even in this case at all?!”.  Don’t lose sight of all the benefits the Chapter 13 is providing.  So long as you follow the Court’s payment plan, you’ll stay protected by the Automatic Stay.  This prevents any creditors from attempting to collect money from you directly.  I know it is a common urban myth that as long as you’re making payments on a debt then that creditor cannot sue you, but this is just a myth.  Even if you’re trying to work with your creditors, they can simply choose to sue you and attempt to garnish your income.  The bankruptcy case prevents your creditors from ganging up on you and trying to collect all of their debts simultaneously.  It also forces your creditors to accept payments, which are often much less than the minimum payments creditors would demand outside of a bankruptcy case.

 

Determining whether the “pros” outweigh the “cons” of a Chapter 13 can be a complicated process. Before filing any case, I recommend that your first step should be a consultation with an experienced bankruptcy attorney. At Bond & Botes, our attorneys have years of experience advising people on their options in bankruptcy.  Each of our conveniently located offices provides free initial consultations with our attorneys.  Please contact us today to make an appointment to discuss your financial situation.

Share This Page

Bond & Botes Law Offices

At Bond & Botes, we now offer full service bankruptcy consultation and filing over the phone or by video from the comfort and safety of your home or office. Please call 1-877-581-3396 or click here to setup your free phone or video consultation.

The lawyers at the Bond & Botes affiliated offices serve clients at offices in Anniston, Birmingham, Mobile, Montgomery, Opelika, Decatur, Huntsville, Florence, Haleyville and Gadsden, Alabama; Vicksburg, Hattiesburg and Jackson, Mississippi. Read our disclaimer here. You can view our Privacy Policy here.

Alabama Offices

Birmingham

2107 5th Avenue North
Age-Herald Building
Birmingham, Alabama 35203
Phone: (205) 802-2200


Shelby County Location
15 Southlake Lane, Ste 140
Birmingham, AL 35244
Phone: (205) 802-2200


Florence Location
121 S. Court Street
Florence, AL 35630
Phone: (256) 760-1010


Huntsville Location
225 Pratt Avenue NE
Huntsville, AL 35801
Phone: (256) 539-9899


Montgomery Location
311 Catoma Street
Montgomery, AL 36104
Phone: (334) 264-3363


Decatur Location
605 Bank Street
Decatur, AL 35601
Phone: (256) 355-2447


Haleyville Location
914 19th St.
Haleyville, AL 35565
Phone: (205) 486-3580


Gadsden Location
430-B Chestnut Street
Gadsden, AL 35901
Phone: (256) 485-0195


Opelika Location
216 South 8th Street
Opelika 36801
Phone: (334) 887-7666


Anniston Location
1302 Noble St #2C
Anniston, AL 36201
Phone: (256) 344-3559


Cullman Location
200 Second Avenue SW
Cullman, AL 35055
Phone: (256) 739-9866


Mississippi Offices

Jackson Location
5760 I-55 North, Ste 100
Jackson, MS 39211
Phone: (601) 353-5000


Hattiesburg Location
607 Corinne St, Ste B8
Hattiesburg, MS 39401
Phone: (601) 264-7200


Vicksburg Location
1212 Farmer Street
Vicksburg, MS 39180
Phone: (601) 353-5000

© 2024 by Bond & Botes Law Offices. All rights reserved. Disclaimer | Privacy Policy