Chapter 13 Bankruptcy: Don’t Let Your Tank, Tank Your Bankruptcy Plan

25 Apr Chapter 13 Bankruptcy: Don’t Let Your Tank, Tank Your Bankruptcy Plan

Rising gas prices are hurting everyone, and individuals in Chapter 13 bankruptcy need to pay close attention to their budgets to avoid falling behind on their Chapter 13 plan payments. Many plan payments can be modified to lower payments to creditors if the debtor can no longer pay as much each month.

A gallon of regular gas rises – then falls – then rises again. For a typicalvehicle that drives about 15,000 per year and gets about 20 mpg, an increase of about $1.00/galloncan easily mean about$75-$100 more per month to purchase gas. If unable to drive less and cut back on how much gas you use, to cover the increased cost of gasoline you would have to reduce spending on something else.

Forany family, this extra cost can spell financial trouble but for those in a Chapter 13, it can be disaterous ifeither the budget or the plan is not adjusted (modified)to compensatefor the additional expense.

Since Chapter 13 debtors are supposed to be paying all their discretionary income into the plan, there is usually very little that can be cut out to cover the increased gas expense without changing what is paid into the bankruptcy case.

Many families file Chapter 13 bankruptcy plans which cover ongoing house payments andcar payments, as well as mortgage arrears or taxes that are behind.

Falling behind on plan payments can be the same as falling behind on those tax, mortgage and car payments, and risk the family home, car or more.

However somebankruptcy planshave some room for adjustment andmay be subject to being lowered, or extended, to give the debtors some breathing room in their monthly budget.

The problems that lead to someone getting behind before Chapter 13 hopefully are under control once the credit cards, medical bills and other debts are reorganized in the plan payment.

  • Budgeting is the key to staying out of bankruptcy, but it is also the key to getting through a bankruptcy successfully.

During the three to five years that the case is open, all the regular expenses need to be covered, and you also have to save up for those out of the ordinary expenses like car repairs, medicals, house repairs, vacations, and other things that you know will come up.

So if you find that your budget is so tight that you can’t put anything away for those types of expenses, youmay wantto call your bankruptcy lawyer now to see if a modification is appropriate or if you have to makek a serious adjustment to your spending, or look for supplimental income. If you can’t modify your payments, better to know now before you hit a real road bump.

  • Don’t let rising gas prices or any other financial problem tank your Chapter 13 plan.

If you are in trouble and you are in a 13, call your attorney to determine if yourbankruptcy repayment plan can be modified.

For more information about gas saving tips read: INCREASING GAS ECONOMYandmy article Budgeting: Gas Saving Tips

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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