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Surviving a Michigan Chapter 13 Budget

When many of my clients file a Chapter 13 bankruptcy, their biggest concern is whether they will still have enough money to live on after making payments to the trustee.  In the ideal world, there will never be a problem with the Chapter 13 plan payment amount.  After all, the payment is based on how much money a debtor has available after paying living expenses.  As long as the debtor can stick with a budget, there should be no problem.

Problems do arise for several reasons.  Sometimes debtors do not accurately list their living expenses.  For example, they forget about certain expenses such as pet food or underestimate the utilities.  Without an accurate budget, debtors struggle to make their plan payments.  When the budget fails, the Chapter 13 case is more likely to fail.

People who file a Chapter 13 bankruptcy are required to have reasonable living expenses.  This may be a problem for people who are used to living beyond their means.  It’s also a problem for some people who have suffered a loss of income because they are used to a higher standard of living.  Also, the court doesn’t consider expenses for non-dependants to be reasonable so tuition payments for an adult child is not considered to be reasonable.

As a bankruptcy attorney, my goal is to help debtors reduce their living expenses and create a reasonable budget that they can maintain.  In most cases, the monthly payments in a Chapter 13 plan are lower than the minimum monthly payments outside of the Chapter 13.  The good thing about a Chapter 13 is that debtors who do struggle with the plan payments may be able to have their payment amount changed.

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