People in 13 fail??

[sophie]

I've read somewhere that most people in a 13 fail. What does that mean exactly? They stop paying their payment to the trustee? They lose their home? I don't understand what it means. And what happens to them? Does the courts want us to fail? If the payment plan is set up that you can't pay it, what's the point?

[HHM]

It is a sad fact, but many chapter 13 debtors cannot complete their plan, meaning, they stop paying the trustee for whatever reason and the trustee has not choice but to dismiss the case. It is not so much the court's fault, it is really Congresses fault with the new law. The new law took away any discretion a BK court judge might have in considering a debtors individual circumstances. However, since the new law is not even a 2 years old, there are no reliable stats as to the success rate, since nearly all chapter 13 plans are five years.

As a practical matter, a lot can happen in five years, and the debtors do bear some responsibility (actually a lot of responsibility) for failure because they tend to fall back into old patterns and do not restrain spending. Also, if something does go awry and their circumstances change dramatically, they tend to wait too long to take action (kinda the same syndrome that got them into BK in the first place).

[aa06a47]

I've read somewhere that most people in a 13 fail. What does that mean exactly? They stop paying their payment to the trustee? They lose their home? I don't understand what it means. And what happens to them? Does the courts want us to fail? If the payment plan is set up that you can't pay it, what's the point?

I have read that there are alot of chapter 13 filers who file just to provide a short term solution to there financial problems and fail because there was never any intent in making it all the way through it. Then, there is the group of people who fail because of many of the reason HMM stated, job loss, medical problem...etc.

I would be curious as to what the actual success rate is of those who filed with intent to make it through the process is. Unfortunatly, you never really know how many of those who failed, never planned to make it through the process in the first place.

Another reason I believe Chapter 13's fail is lack of knowledge of the debtor going into the process along with a bad lawyer. Those who read these forms tend to be more informed and get a feel for what expenses are allowed and not allowed. I think that many of the bankruptcy lawyers who are so cookie cutter approach to bk filings, many of the special circumstances in ones finances tend to get over looked and result in the debtor paying too much per month to the trustee.

[Clear2Close]

I have worked with a lot of people in a chapter 13. In the past I had also filed a 13 and know just what people go through. It is difficult to complete a 13. It seems we all rationalize in our minds that we can make the payments at hand. However we are rolling a good amount of debts we couldn't pay into a 5 year term. Its difficult to make your past payments on top of your present payments. there are other solutions though.