Alfred Abel Explains 4 Reasons Why Chapter 13 Bankruptcy Might Fail
Nearly everyone filing for Chapter 13 bankruptcy does so with the best of intentions. Everyone wants their Chapter 13 to succeed, particularly if they have chosen Chapter 13 specifically so they can protect certain assets they want to hang onto. However, any Chapter 13 bankruptcy attorney in Philadelphia can attest that sometimes bankruptcies do fail.
We want Philadelphia-area residents who are considering bankruptcy to be prepared for what is to come, so they have the best chance of success. So, here are some of the most common reasons we have seen for bankruptcies to fail.
4 Common Reasons A Chapter 13 Bankruptcy Falls Through
Filing with No Attorney Representation
In theory, the legal system allows for private citizens to handle their own legal affairs without requiring the participation of an attorney. However, regarding Chapter 13 bankruptcies, this is rarely the case. In fact, a study a few years back showed that less than one-half of one percent of people filing for Chapter 13 bankruptcy without legal assistance actually succeeded. By comparison, approximately 55% of Chapter 13 filings handled by experienced lawyers were successful.
Simply put, you need an experienced Philadelphia Chapter 13 bankruptcy attorney on your side if your filing is to have any reasonable chance of success.
Inability to Keep Up the Discipline
If that 55% statistic in the previous point seems low, this is because the conditions of Chapter 13 bankruptcy are difficult to maintain. Under the strain of insolvency, debtors are confident that they can handle the strictures for 3 to 5 years. But the reality sometimes is harder than they expect when they are living with no disposable income for all intents and purposes.
Failing to Maintain Communication with Their Trustee
In Chapter 13 bankruptcy, the debtor makes monthly payments to a court-appointed trustee who then distributes those payments to the creditors in accordance with the court’s instructions. Debtors should always maintain communications with these trustees, particularly if they are having financial difficulty.
In the event the debtor simply stops paying without communication, the trustee will have no choice but to petition the court to throw out the bankruptcy. At that point, creditors can resume collections activities.
Changing Financial Circumstances
The typical Chapter 13 repayment schedule takes place over several years, usually 3-5. Obviously, no one can see their own future. Many debtors start out with a payment plan they think can easily manage, but then circumstances change, such as losing their job or having costly medical bills.
Fortunately, in these situations, a Philadelphia Chapter 13 bankruptcy attorney can often have the repayment plan adjusted when genuine misfortune is involved.
Seek Experienced Help When You Are Considering Bankruptcy in Pennsylvania
Bankruptcy can be quite complicated. For best results, you need a Philadelphia Chapter 13 bankruptcy lawyer with experience on your side. Our team at Alfred Abel Law Offices can provide you with the legal services and solutions you need. Contact us for a consultation and more information.