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How To Live On a Chapter 13 Bankruptcy Budget

Posted: February 28, 2022 at 9:25 am / by / comments (0)

A bankruptcy can be a lifeline to those in need. It can provide legal protection and may stop foreclosure proceedings.

Anytime you file for Chapter 13 bankruptcy, the key to completing your bankruptcy repayment plan is ensuring that your lifestyle conforms to your budget. The bankruptcy trustee determines your Chapter 13 repayment plan according to your monthly budget. However, the trustee does not include your every expense for the month. They also don’t consider any potential emergency expenses.

Photo by Mikhail Nilov from Pexels

Because of this, it’s incredibly important that you create a budget as soon as you can. Having a budget that you stick to can not only set you up for success while filing for bankruptcy, but it can also prepare you for a life of financial stability once your bankruptcy is closed. There are literally millions of tools that can help you create a budget that matches your needs exactly. Look around for something that will help you create a budget and stick to it in order to increase your chances of successfully completing your Chapter 13 bankruptcy process.

Some examples of such tools are Savvy Debt Payoff Planner or CoPilot. You can also learn more about personal budgets by visiting; there are some intuitive and free worksheets there. Finally, you can also check the Consumer Financial Protection Bureau for information and resources that are helpful in creating a budget.

What Does A Successful Chapter 13 Budget Do?

A successful budget ultimately will help you stay on track with your bankruptcy repayment plan. A budget can do this in a variety of ways, but one of the most prevalent ways is by cutting your spending. When creating a budget, you have to assign a place for every dollar to go. When money isn’t allocated to a specific category, it’s easy to overspend on things you don’t necessarily need. When you’re going through Chapter 13 bankruptcy, overspending can result in missing your required payments. In this case, a successful budget helps account for your money, making sure it goes where it is most needed, and sets you up for a financially stable future.

Chapter 13 Bankruptcy Support Forums

You’re not alone in your struggle to be free from debt. Being in a helpful community can provide the right atmosphere to be diligent in budgeting.

BKForum is a reliable bankruptcy survival community. Here, you have the opportunity to read articles and information about “surviving” a Chapter 13 bankruptcy. You can also ask relevant questions and share some important information with others that are in a Chapter 13 case. The forum has helpful tips for surviving bankruptcy, as well as an encouraging community that can help you through the hard times.

How to Avoid Incurring New Debt in a Chapter 13 Bankruptcy

Typically, the reason most people file for bankruptcy is because they have a mountain of debt that they are struggling to stay on top of. It wouldn’t make sense to allow someone to continue building their debt while trying to get rid of debt. After you have filed for a Chapter 13 bankruptcy, you are usually not allowed to incur any new debt.

There are exceptions to this rule, but for the most part, new debt isn’t something you can easily get while going through a bankruptcy. One example of an exception may look like the following: if you want to sell your home or buy a new one, you must first file a petition to the bankruptcy court to get approval to sell your home and get a new mortgage. Similarly, you would need to petition a court for approval of a car loan or any other type of loan. Doing these things doesn’t automatically mean you will be approved, however. The court will asses how severe of a need your request is and make their decision off of a variety of factors.

Prepare For Emergency Expenses With Emergency Savings

Sometimes, it can be impossible to avoid new debt when you’re going through Chapter 13 bankruptcy. Life throws unexpected events at us that usually lead to non-budgeted expenses. A great way to avoid incurring new debt while in bankruptcy is by having an emergency savings account.

Some tips to make saving for emergencies easier are:

  • Automating emergency savings by automatically and periodically depositing a specified amount from your paycheck into a savings account.
  • Don’t attach checks and debit cards to your savings account.
  • Open emergency savings account at a bank that’s different from the one you use often.
  • Treat your emergency savings as a recurring monthly expense.

Once you have a substantial emergency fund, you can keep yourself from scrambling for cash anytime an unexpected expense pops up. This can also help keep you from needing to take out emergency loans with inflated interest rates.

When Should You Notify Your Bankruptcy Attorney About Any Difficulties?

The short answer is: notify your bankruptcy attorney immediately.

If you experience any Chapter 13 bankruptcy-related problems or any issue with your finances, then contact your attorney immediately. It’s best to first ask questions before making an attempt to fix any problem. Quite often, your attorney is more knowledgeable about solutions to problems, so he/she will suggest a more suitable way out of your challenge. Regardless of whether or not they are able to offer you a solution, its important that your bankruptcy attorney is aware of any potential changes to your case so that they can better prepare.

If you are ever at the point of possibly missing a payment, your bankruptcy attorney can petition your bankruptcy court for a payment moratorium. A payment moratorium gives you a short two or three-month break from making Chapter 13 payments. It adds to your payment duration by a couple of months. The important thing to realize is that hiding information from your bankruptcy attorney or trustee won’t help you. Be upfront with your situation, and any changes in your situation, and both you attorney and trustee will try to work with you to figure out the best solution.

Can I Make Extra Plan Payments on My Chapter 13?

Yes! You can pay more than you’re required. However, it’s best to first consult your attorney before taking such a step. The court may view extra payments as a sign that you can afford to pay more than they expected. If so, the bankruptcy court will increase your monthly payments. So while there are pros and cons to making extra payments, the best thing to do is ask your attorney.

Common Reasons for Chapter 13 Case Dismissal

Non-payment is the most common reason for a Chapter 13 dismissal. If you miss one or two payments, you might be able to negotiate your payment terms to catch up. However, that’s only a one-time option. The court will almost definitely dismiss your Chapter 13 case if you fail to make your payments in the future.

Other noteworthy reasons for a Chapter 13 bankruptcy case dismissal include the following:

  • Failure to pay court fees
  • Bankruptcy fraud
  • Failure to file required tax returns
  • Not completing bankruptcy form
  • Not making court-ordered payments
  • Failure to submit the required documents to the Chapter 13 trustee

If your Chapter 13 bankruptcy case is dismissed, your creditors will then have the right to take all legally permitted action to collect outstanding debts. The automatic stay no longer prevents you from repossessions, collection lawsuits, wage garnishments, and other debt collection actions.

There are some pretty intense consequences for having your Chapter 13 case dismissed. Luckily, having a budget that helps you stay on top of your payments can help you avoid one of the biggest reasons for dismissal.


Bankruptcy is hard, and some people try to avoid it all together but there are ways to make it easier. One of the best ways you can prepare for and get through a bankruptcy is by living on a Chapter 13 bankruptcy budget. Not only will this help you pay off all of your debt, but it will also help you prepare for a better future.

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