Chapter 13 bankruptcy reorganizes your debt, allowing you to pay it back in installments via a long-term repayment plan. For filers who maintain a consistent, reliable income, Chapter 13 offers a viable path out of unmanageable debt. However, to get the most benefit out of your plan, it's important to avoid the mistakes filers commonly make. Here's a closer look to boost your chances of success.

What to Avoid During Chapter 13 Bankruptcy

1. Accumulating New Debt

Taking on new debt will only make it harder to meet your monthly payment plan obligations. You'll have to pay off both the old debt and the new at the same time, which can be a significant financial burden for a person who has had to seek bankruptcy relief. It can complicate your budgeting and restrict what may be an already limited income. 

Additionally, once you decide to file for Chapter 13, stop using credit cards and accumulating debt. The courts will look at all debts accrued within 90 days of filing, and they may not approve these recent balances for inclusion in your repayment plan.

2. Missing Payments

Make your scheduled payments on time each month. This may require some careful budgeting and planning. Consider adding alerts for payment due dates into your phone's calendar, setting them for at least a week in advance so you can meet all deadlines. 

Remember that in a Chapter 13 bankruptcy, a filer must pay their monthly plan balance in addition to all their regular bills and obligations. In most cases, your first Chapter 13 payment will be due 30 days after the case is filed with the courts.

3. Neglecting to Inform Creditors

The law requires creditors and debt collectors to stop contacting you once you file for bankruptcy. Take full advantage of this opportunity, as it's no secret that creditors and collectors can be ruthless and disruptive in their attempts to recoup payment. As soon as you've made the decision to file, inform all creditors and collectors, let them know about the filing, politely request that they stop all contact, and refer them to your attorney for questions or concerns.

To ensure you have the full protection of the law on your side during a Chapter 13 bankruptcy, trust the legal team at Pearce Law Firm. Since 1998, they have been serving clients in the Foley, AL, area. They provide representation in bankruptcy claims and will guide you through every step of the process as you begin your journey back to financial freedom. Call (251) 971-2676 or visit their website to schedule a consultation.