Question What Should I Know Before Filing Chapter 13? Would Love Your Insights!

[summersquash]

Hi BK Forum,

I'm preparing to file for Chapter 13 and would really appreciate hearing from those who’ve been through it — especially anything you wish you had known before starting the process.

Here’s my current situation:
I recently had to take a lower-paying job and starting next month, I won't be able to keep up with my unsecured debts (mostly credit cards and personal loans). Up until now, I’ve been floating by using savings and borrowing, but that’s no longer sustainable.

I’ve started talking with a bankruptcy attorney and we’re in the early stages — gathering documents and reviewing income, expenses, and assets. I do own a home and my goal is to protect it and pay off the debt I accrued through a 3-to-5-year repayment plan.

I’d be incredibly grateful if anyone could share:

• What do you wish you had done or known before filing?
• Any missteps or surprises you encountered?
• Things that helped make the process smoother or less stressful?
• Budgeting or documentation tips that really helped?
• What about ability to save money in a 401k, savings account or checking?
• Any allowances for pets?

I want to go into this as informed and prepared as possible, so any insights would mean a lot. Thanks in advance to everyone willing to share their experiences — I’m listening and learning!

Thanks!!

[shipo]

I have two pieces of advice; the first, make sure you're contributing at least as much into your 401(k) as qualifies for a match; I started out doing that, and then each subsequent year I upped my contributions to keep my salary flat for the full five years.

The second is go out and buy a new(er) car will a full 5-year warranty and maintenance, and finance it all. The car will then be paid through the bankruptcy. Whatever you do, don't do what I did and start your Chapter 13 with an old car; by the time my fourth year rolled around, my car had over 200,000 miles on it, and while it was mechanically sound, it was rusting away from underneath me.

[summersquash]

Thank You shipo those are two things I never thought about. I am going to check into that 401k match right now. Thanks Again!

[arrgy]

Things you need to know:

1. Make sure you are comfortable with your attorney. Also, realize most of the process is done upfront, after confirmation hearing you shouldn't want to talk to your attorney until the end.
2. I agree with the car from the post above. Realize, unless God forbid, you are in an accident, you are stuck with your car for 5 years. And if you have to get another car, even from an accident, its a pain.
3. I kind of agree with the 401K statement above, however, sock away as much money you can for emergencies. If your food budget for the month is listed on your schedules as $300, spend only $200, and save the other $100. The trustee is never going to check your bank accounts, they only go off of your tax returns.
4. No allowances for pets.
5. Get a PACER account so you can check the claims and documentation. But don't obsess over it.
6. The 341 meeting is not a problem if your lawyer prepares you. Don't stress over it. The trustee has to confirm who you are, how much you are going to pay, and he will tell you with your lawyer present any upcoming issues that may delay confirmation. You have a month from filing to your 341 meeting and a month after that until your FIRST confirmation hearing. I say first, because a lot of times people have the first one delayed. My mortgage company waited until the day before the hearing to submit a claim, there was no way we could amend my plan so the hearing got pushed back a month. Realize the trustee is the main person who objects and he gets paid only if the plan is confirmed, while they do have to be fair, most trustees do want people to at least start their plan so their office can get paid. I know one person who was delayed 9 times, and it took almost a year to confirm a plan, but it got confirmed.
7. If possible, once you get an amount you have to pay IF you are able, see if you can get an emergency fund going right away, sock away the money, just in case you come up short one month. My payment is $1300,I was able to save that amount and got myself a long term certified check from a bank. Just in case. Once the time comes up for it to expire, I will cash it myself and get another one.
8. Ask your attorney if it is possible through the chapter 13 plan to modify your mortgage. Some jurisdictions (like mine) allow it to happen, and it happens through the BK court, so it is rock solid.
9. TFS pay is easy and that is mainly how you pay the trustee, just realize that it takes up to a week or more from the time you schedule the payment until it actually gets to the trustee.

Good luck.,

[summersquash]

This is good advice arrgy. Thank you for taking the time to provide this level of detail. I truly appreciate it!

[Carmella]

I agree with the car. Definitely have a reliable car. One of our cars died and then my husband and I had to share one car. That was tougher than the dang BK 13. I will somewhat disagree about getting a car after an accident as being a pain. My car was totaled by a drunk driver near the end of our BK. It was a process, but not too painful to get a car during BK the court was totally understanding. Our problem was the pandemic and poor selection of cars.

Get a good experienced attorney in your district. If you gut feeling is negative don't use that attorney!

If you can set some money aside for unexpected expenses, you know there's always something that comes up when you own a home.

If there's any necessity (not luxury) item you need get it before the BK. If your cellphone is about the bite the dust, etc I would get a new one, just not the high end model, etc.

If you are paying your car payment or house payment outside the plan you will most likely lose your ability to make online payments. Just be aware you might have to mail the payments, pay by phone or pay in person if you are close enough to do that. One of our car payments had a third party option to pay online for a small fee (I think $1). The banks/creditors can't collect any debts that's why they do this.

During BK I did a lot of bargain shopping. I would go to more than one store. Walmart had the best prices on some items so I always went there and saved a good amount of money compared to the regular grocery store. I would buy certain items at Aldi's. I would try to buy stuff on sale as much as possible. Spend as little as possible during the BK years and I like the idea above about saving up money. I wish I had more info like that when I started. Our budget was very tight since we were still supporting our new college grad daughter for her basic necessities. The BK did not account for us providing her support since she was a young adult, but her low paying internship after graduation wasn't enough to support her as she started out.

[summersquash]

Carmella, thank you. I've definitely been analyzing my food budget lately—I really can't afford to be frivolous. Even one impulsive purchase, like trying out a new food just to experiment, could throw off my whole month. And I completely agree about the home—something is always bound to go wrong, and I want to avoid the added stress of not being financially prepared.

[Carmella]

summersquash If I knew this before our BK 13 I would have definitely tried to cut back here or there just before filing or maybe I could have saved something during the BK 13 even with the expense of our daughter. Or I would have tried to think ahead about stocking up on certain items or buying a new/new to us car. It was a very traumatic experience for me and my husband. I wish I would have found this forum before we filed it would have made the experience less stressful. For your food budget you might be able to find ways to still experiment with some meals, just not impulsively if you get an idea and think it out! Or plan a "new" meal once a month and really pick and choose the ingredients! Almost like a challenge. When my daughter moved out, we were still in BK 13 and we did help her with some moving expenses and I got really good at finding good deals. I got the Keurig she wanted and found a super deal on it. I got so good at stuff like that until this day if there's something she is looking for she will ask me if I can find a deal and I overheard her tell her husband that I take it on like a challenge! If she only knew. We never told her about the BK we just told her we were paying off our debt, cutting up the credit cards and not spending. She was at a stressful point in her life and we didn't want to drag her into it and I know she would have felt partly responsible, like kids do when parents have a problem.

[anonymoose]

4. No allowances for pets.

Ouch - is there any wiggle room to fold this into your personal food budget? With food, litter, medication, and vet appointments that's going to be a real expense.. and as a single/lonely person, I can't consider having a pet a luxury.

[Carmella]

Ouch - is there any wiggle room to fold this into your personal food budget? With food, litter, medication, and vet appointments that's going to be a real expense.. and as a single/lonely person, I can't consider having a pet a luxury.

It's a matter of budgeting. I don't know how high maintenance your pet is. My dog was low maintenance, but I know some are more sickly or need grooming, etc.

You don't have to spend X amount on food and X amount on something else. You will have a BK payment and then you will know how much money you have for the month to pay for whatever needs to be paid for, assuming you are talking BK13.

We were able to cover some expenses for our young adult daughter out of our budget, but we were "not allowed" a budget for her since she graduated college the same week as we filed. We made it through. I shopped for bargains, went to Walmart. Didn't buy extras. I can't say for sure, but if we could swing it for helping to support a young adult I think there's a good chance you can swing it for a pet. If you don't know how much you spend on the pet, you can add it up and figure out a real dollar amount and then look and see if there's anything you can do to reduce the cost. Is the litter or food cheaper at Walmart or some place else? This is really what I did found the lowest prices on regular items and if things would go on sale on a regular basis I would wait for the sale...like Bath and Body handsoap that I really really like /don't want to give up it goes on sale on a regular basis.

You won't know until you see a BK attorney and get the scoop on your personal situation.

If you are sinking in debt that you can barely handle it's not going to get better. If you can go into Dave Ramsey mode maybe you can do it on your own, some people do. My husband and I kept failing at debt repayment and I wish I knew then what I know now because it would have saved us years of beating ourselves up with failure.

If you decide to go with BK, don't bring any new pets into the picture until you are finished with the BK. Keep the pet (s) you have and enjoy their company.