What Happens If You Fail To Keep Up With Your Bankruptcy Payments

 Posted on February 20, 2018 in Bankruptcy

When deciding whether or not to file for Chapter 7 or Chapter 13 bankruptcy, often the choice boils down to the immediate finances. Chapter 7 bankruptcy usually requires a higher upfront payment, typically around $1,000 versus Chapter 13 may offer $0 deposit. Throughout the duration, Chapter 13 is more expensive, approximately $3,000, but many debtors are unable to produce the higher initial costs for the alternative, and Chapter 13 often allows the inclusion of the fees in the repayment plan. Unfortunately, for a significant portion of the population, this decision is costly with lasting effects on the credit for only short-term relief.

Debtors Below The Poverty Line Are More Susceptible to Relapse

The low initial costs of Chapter 13 bankruptcy is alluring for many individuals struggling to make ends meet. Armed with the dream of living in a home without collectors calling around the clock and having some money left over at the end of the month, many debtors turn to debt relief options. However, not all bankruptcy options are equal. Chapter 13 operates on a repayment plan, typically about five years in length. So long as payments are kept up to date, collectors are unable to harass clients. However, for the population living under the poverty line and struggling to make ends meet, about half make it through the first year, let alone five years, and the calls begin once more.

What Happens If You Miss a Payment

Having the money upfront to file for Chapter 7 instead of Chapter 13 pays off in the long run. The total costs are about a third of the price of other option, and it wipes the credit slate clean in a fraction of the time. Chapter 13 does afford the ability to keep many possessions, but for those with limited assets, bankruptcy law allows many debtors to keep what assets they have even in Chapter 7. For these reasons, Chapter 7 is almost always he chosen option, except for those living paycheck to paycheck, when the down payment is often inconceivable. For those left to pick Chapter 13, failure to make timely payments can have these repercussions:

• Your petition will not be confirmed;
• Creditors gain permission to resume collection efforts; and
• Case dismissal.

Get Legal Help

Bankruptcy is a complicated process and if done incorrectly can lead to relapse or denial. Having a DuPage County, IL bankruptcy attorney on your side to walk you through the process can increase the probability for success without having to file again, enabling you to fulfill your dreams of a debt-free life. The attorneys at Davi Law Group, LLC understand the frustration of your situation and want to see you successfully reach your goals. Call us today at 630-580-6373 to get started.

Sources:

https://www.theatlantic.com/business/archive/2017/09/bankruptcy-memphis-chapter-13/541194/

https://projects.propublica.org/graphics/bankruptcy-data-analysis