Now That You Have A Chapter 13 Agreement: Tips For Making Your Payments

Once you have chosen Chapter 13, you will need to commit to make your regular payments to ensure that creditors get at least some of what you owe them. Fortunately, there are some techniques you can use to make paying off Chapter 13 much easier.

Payroll Control

To make sure that you do not default on your Chapter 13 bankruptcy, one option is to select payroll control. This is where the monthly payment for Chapter 13 is deducted straight from your paycheck. This eliminates the temptation of spending the money from your paycheck on other things. Then, as long as you remain employed, there will be no motion to dismiss.

Increased Revenue

Chapter 13 forces you to pay back your creditors with your disposable income. If you can reduce your expenses, you will have more of a disposable income to pay your debts down more quickly. If your disposable income grows for whatever reason, your monthly payments will also grow. If you try to pay more than what is ordered by the courts, you may be able to pay down your debt more quickly. However, the courts often do not allow early payments.

Early Payoffs

When you propose an early payoff, the creditors have the right to reject. One of the reasons why creditors may object is because an early payoff can reduce the amount of money the creditors could earn if you experience a later increase in your income, which would increase your monthly payments.

Extending or Delaying Payments

It is in your best interest to do whatever you can to make your regular payments. However, sometimes, despite your best efforts, you are unable to. Depending on your circumstances, the courts may choose to provide you with relief by suspending your payments or increasing the length of your plan so that your payments can be made less expensive. 

Acquiring More Debt

After you have filed for Chapter 13 bankruptcy, you are usually not allowed to acquire more debt. However, you are sometimes granted permission by the courts to obtain a car loan. If your circumstances change and this can impact your ability to make your chapter 13 payments, notify your attorney.

Chapter 13 bankruptcy requires considerable discipline. Not only do you need to create a budget, but you must stick with it for three to five years. Therefore, it is understandable that it is so difficult for some debtors to avoid defaulting on their Chapter 13 bankruptcy payments. But if you keep up with your payments, this is often one of the best ways to get out of debt. But with the help of a bankruptcy attorney, you'll be able to negotiate a plan that you will be much less likely to default on.