T-Boz Watkins got her Chapter 13 case tossed out of court for not following the rules of Chapter 13 bankruptcy.
While Jay Fleischman at ConsumerHelpCentral laid down the law, so to speak, in listing the rules, he didn’t remind us why they are worth following.
Chapter 13 bankruptcy: better than sliced bread
You cannot beat the deal in 13: you get to keep your assets, by making payments over as long as five years, to give your creditors what they would have gotten had you filed Chapter 7.
You get the protection of the automatic stay for the life of the plan, keeping creditors from reaching your money or your assets, while you make payments.
You get a bankruptcy judge who will enforce the rights you get in Chapter 13, including making all creditors honor your plan.
You get to change the terms of your plan if things change and you can’t live with the original terms.
You get the broadest discharge of debts available in bankruptcy.
Somehow, following the rules doesn’t seem so onerous.
Oh, and I didn’t mention that you can catch up on your mortgage, strip off undersecured loans or other liens on your home, or pay the delinquent taxes without penalty through the plan. All without any negative tax consequences for ditching the debt.
I know the pattern that may have been at work in T-Boz’s case. After all the stress of living with impossible debt and making a difficult decision to file bankruptcy, you let down.
The pressure’s off, you’ve made it to a safe haven, and the adrenaline stops running. Not so fast.
If you don’t pay attention and give the rules of the Chapter 13 road the attention they deserve, you’ll find yourself out of court and out of luck.
It’s not hard; it just takes focus. And the prize is worth it: a debt free future.
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