Student Loans and Bankruptcy

5 Tips to Successfully Manage Your Chapter 13 Repayment Plan

9 March 2021

Roy Sanders

Chapter 13 bankruptcy can be a great benefit for many debtors, but it's a more complex process than a simple Chapter 7 (liquidation) bankruptcy. Because the repayment plan for Chapter 13 can routinely last three to five years, you need a plan to successfully manage it for the long term. Here are five tips to help you do just that. 

1. Create a Support Network

A support system is a must-have for the next few years. This should include professionals, like your bankruptcy attorney and an accountant, who can provide guidance in the technical issues of maintaining your finances and completing the payment plan. It should also include close friends or family and possibly even a therapist who can help with the emotional or personal issues of bankruptcy. 

2. Communicate Well

Stay in good communication with everyone. You may need to respond in a timely manner to notices from the court or trustee. Have regular check-ins with your lawyer, even when things are going well. And don't ignore correspondence from creditors, as these may be something your attorney can help resolve. Finally, be sure you open up to your personal support network. 

3. Tighten Your Budget

The best way to be certain you can make all your payments on time and receive the full benefits of bankruptcy is to live on a tighter budget than is absolutely necessary. Look for ways to squeeze a little more buffer in your monthly budget throughout the process. This way, even if your financial situation changes, you don't risk dismissal of your case and losing the headway you've made. 

4. Prioritize Payments

To exit bankruptcy successfully, you must complete all payments on time and in full. Failure to keep up could see your case dismissed or changed to liquidation. At the same time, you may also have debts that weren't part of the bankruptcy, such as child support or student loans. Without the benefit of bankruptcy protections for these, they can be a financial risk if you focus too heavily on just the bankruptcy payment. 

5. Ask Before Making Decisions

Most debtors wait until they complete Chapter 13 to take on new debt or make big purchases. But this isn't always possible. If you need to take out a loan to replace a broken vehicle, for instance, this is likely permissible under your bankruptcy agreement. However, you should contact the trustee first in order to avoid any unexpected problems. The same goes for any windfalls. 

Where to Learn More

Want more tips for not only surviving bankruptcy but actually thriving during Chapter 13? Start by meeting with a bankruptcy lawyer in your state today. Together, you can design a plan that will bring the most relief and avoid added problems. 

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