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Chapter 13 Bankruptcy is Difficult Under Ideal Circumstances to Discharge

That happens more often than you would think.  There are a lot of low profilers who frankly got out of the Chapter 13 for whatever reason.  Chapter 13 is very difficult under the ideal circumstances to make it all the way through to discharge, because your financial situation basically has to remain stable for five years.  And some times, that just doesn’t happen, as people lose jobs and credentials go up, I mean gas is always going up, isn’t it?  You know things just happen that people can’t control.  But there is a way to convert the case from a Chapter 13 to Chapter 7, if you find that you just cannot make the plan payment,  (I actually had a conversation with a client today about this) then you can convert the Chapter 13 to Chapter 7 to get a discharge but it will be a Chapter 7 discharge.

In Chapter 13, An Individual Is Not Eligible For Discharge For a Period of Two Years

So you ask, “How many times can someone receive Chapter 13 bankruptcy?”  Could that happen twice in their lifetime?

If you successfully obtain a discharge in a Chapter 13, you are not eligible for a discharge for two years.  You must keep in mind you’ve been in bankruptcy for either 3 to 5 years and you have paid back some of your creditors, so  where there is actually a two-year bar to refiling a new bankruptcy, that assumes you got a discharge to the old one.  A lot of people like our process, but if they screw something up, their case gets dismissed and they have to re-file – or they miss plan payments, causing their case to get dismissed and then they have to re-file.

A Chapter 13 Can Influence an Individual to Start Budgeting their Expenses

If you get rid of a credit card, you may get rid of the “Let me just swipe this and I can buy that fancy thing” mentality, and you actually have to pay cash.  We find that people are much less willing to part with cash than they are willing to swipe that credit card; it just makes people more conscious of what they are buying and how much they are paying. When you get to the end of that grocery line and you know that $150-odd grocery bill comes up and you have to pay that $150 with cash and you know that money is coming out of the bank account, you may rethink some of those non-essential purchases versus just handing somebody your credit card. You have an immediate concern rather than to worry about it next month.  We have found that sometimes it can be a good thing when people say “I can’t have my credit frozen for that long,” but then they choose to do it anyhow.

A Debit Card Can be Used During a Bankruptcy as Opposed to a Credit Card

Some people say “Oh, no”.  You know I need a credit card

Now, you can use debit cards, with which you have to be careful, because the debit card is attached to your bank account and that money is coming out of a bank account. So that money does have to be there.  Sometimes, the Chapter 13 can be a way for an individual who has never budgeted to actually budget and keep a good watch on their money. Because sometimes, the individual does not have a money gram, and they do make enough money, but they don’t know where their money is going because they’re not tracking it, a debit card can be of help in keeping track of their spending.