Day-to-Day Life in Chapter 13 Bankruptcy

by Karen Oakes, Esq.

October 20, 2007

My clients ask me

  • “What will life be like while I am in my Chapter 13 case?”
  • “Will I have to ask permission to spend more than my budget allows on transportation?”

My clients worry that something will go wrong and they will have no money at all.  When the reality hits, they usually have enough money for emergencies.  We sit down and discuss their budget which will be presented to the Court.

Many times, debtors have been paying a garnishment through their paychecks which takes up to 25% of their disposable income here in Oregon.   Now, they are making a set payment (also usually through garnishment/wage order), but the payments are set, regular and anticipated.  We talk about how much  money the IRS says is reasonable to spend on food for a family their size.

Because of the past-garnishments, they have been spending far less and loading up on starches.  We talk about averaging utility costs – higher in the winter or higher in the summer?  We talk about the needed repairs to the family car and either estimate the costs or get a written estimate for the repairs.  By the time we are done with their budget, it is a realistic reasonable budget that they should be able to follow and live with.

If the clients chose one month to use some of their food budget money for a transportation item, that is their choice.

Clients come in a couple months after the 13 is going and thank us for relieving the stress of worrying how the utility bill was going to get paid vs. how to eat that month.  All in all, day-to-day life in Chapter 13 seems much less worrisome than daily life dodging debt collectors and creditors!

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.

Last modified: May 22, 2013