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Chapter 13 Plan Payment Too High?

Is your Chapter 13 plan payment too high in your bankruptcy case?  You can sometimes have your bankruptcy trustee agree to reduce your plan payment.  Your Chapter 13 plan payment can be reduced due to variety of reasons.  If your payment is too high, such a reduction can save an otherwise impossible case.

Chapter 13 Bankruptcy Payment Too High

Reduction in Income Could Reduce your Payment

If your Chapter 13 plan payment is too high, you can sometimes get it lowered if you encounter a reduction in household income.  If your income reduces, you are many times also allowed to reduce your plan payment.   This is accomplished usually by filing a Motion to Modify your Chapter 13 plan.   Or, alternatively, if your plan is not yet confirmed, you can sometimes just have your attorney file an amended plan.  If your income has dropped considerably, you may even be able to convert your case to a Chapter 7 in some situations.

However, even if your Chapter 13 plan payment is too high, you cannot always reduce it simply due to a drop of income.  Some cases are already calculated at the absolute minimum level for achieving your Chapter 13’s goals.   For instance, if you are paying your mortgage and car payment through the Chapter 13 plan, you could very likely already be paying the minimum amount required for case.   In such cases, a drop of income would have no effect on reducing even an impossibly high Chapter 13 payment.  You would likely need to change the plan by surrendering the car or house in such a situation in order to drop the payment any further.

“Changing Your Plans” to Change Your Payment

Your plan payment can many times be reduced in Chapter 13 by “changing your plans.”  For instance, consider if you changed your plans by surrendering an over-priced, high-balanced automobile in your Chapter 13 case.   If this automobile had a balance of $35,000 in your Chapter 13 case, you could reduce your Chapter 13 payment up to even $650 per month.  Surrendering a house, a boat, a motorcycle, or other items can also sometimes have a similar effect.

Remember, however, not all cases are alike.   Every case has different requirements on repayment to creditors.  If your income is too high, you may not realize a significant reduction in your plan payment by “changing your plans.”  You may be required to pay back up to 100% of your debt in your Chapter 13 case depending on your debt and income levels.  Although you will generally always reduce your plan payment by surrendering items, a 100%-pay-back case may not receive the same dramatic discount on plan payment that other cases may realize in surrendering items.

Changes in Expenses or Circumstances

When a Chapter 13 payment is too high, a change of expenses or circumstances can also warrant a reduction in your Chapter 13 plan payment.  New expenses (if high enough) are many times valid justification for reducing your plan payment.  For instance, if a family is required to take on massive new daycare or child care costs, a reduction in the Chapter 13 plan payment may be possible.  If a family member becomes ill, this may result in new medical costs and a reduction of the Chapter 13 plan payment may be possible.

If your circumstances change, you can also sometimes reduce your Chapter 13 plan payment.  For instance, if you are encounter marital problems and become separated, you may be able to reduce your plan payment.   If more family members or dependents are added to your home, you may also be able to reduce your plan payment.

Chapter 13 Payment Too High?  Bankruptcy Lawyers Have the Know-How

Remember, always seek the advice of an experienced bankruptcy attorney if you want to reduce your Chapter 13 plan payment.  Most Chapter 13 bankruptcy attorneys have dealt with these Chapter 13 payment issues hundreds of times.  They have the experience to explain exactly what is possible in reducing your payment.

Service of Process to Bankruptcy Creditors

If I file Bankruptcy, Will I Need to Provide Service of Process to All My Creditors?

If you file for bankruptcy, all of your creditors will receive appropriate service of process automatically through the Federal Court’s noticing system.   Usually, you or your attorney will not need to directly notice your creditors.   Initial “service of process” occurs automatically when the federal court sends out the bankruptcy notice to each of your creditors.

What is Service of Process?

Service of Process is simply giving correct legal notice to another party that you have initiated a lawsuit or other legal proceeding.   The party in which you “serve” notice is usually a defendant or somebody else who has a stake in the case at hand.   Essentially, all appropriate parties must receive service of process in some legally-appointed fashion.

Proper legal service can occur in many ways.   It all depends on the type of law case being initiated.   Most forms of legal service do not occur “automatically” such as in Federal Bankruptcy Court’s noticing of the creditors.   In many non-bankruptcy cases, notice is frequently required either through signed certified mail or delivery by the county sheriff’s office.  Because of varying service requirements, refer to your attorney and your court’s local rules to see how service is appropriately made in any specific filing.

Service of process can also occur through a process server.   Process server companies will track down a defendant and personally deliver appropriate service.  This type of service has huge advantages for at least two important reasons.  First, the process server will many times be able to track down hard-to-find defendants on a case.   Second, the process server will have proof that the party received actual, personal notice.  It creates a situation where undeniable service took place with the opposing party.   The other party will be forced to attend hearings or other matters on the case.   If they do not attend, they will be held in contempt of court. The party will not be able to argue that there was no appropriate legal notice.

For more information on Service of Process, visit Hoosier Process Servers.

Bankruptcy Service of Process

How does Initial Service of Process (Notice) Occur on a Bankruptcy Case?

In a bankruptcy, a creditor list is required to be provided to the court in the bankruptcy petition.  In addition, at text file of all the creditor’s addresses (and other relevant parties) must also be provided.   By using this text file, the court’s noticing system will generate and mail out the bankruptcy notice to each creditor in the case.  This is part of the reason why the $335 and $310 filing fees are required on Chapter 7 and Chapter 13 cases respectively.   Part of these fees go to the cost of providing mailed notice to the creditors in each case.

Using Your Tax Refund Wisely

Using Your Tax Refund Wisely:  Bankruptcy Can Reduce your Monthly Debt Burdens

Use Your Tax Refund Wisely

At this time of year, many families receive a tax refund.   Many times, these refunds are used to catch up on credit bills.  Other times people use their tax refund to take care of desperately needed household expenses.   However, using your tax refund to file for bankruptcy can go much, much further.

Monthly Debt Payments Can Be Erased by Your Tax Refund

If you spend $300 per month or more servicing your debts, your budget is already feeling the pain of a high debt load.  At $300 per month, you are paying $3600 per year just to service your debts.  The worst thing is that many times the total balance of your debts do not decrease.  You essentially pay every month and receive little or nothing in return.

If you spend $500 per month, then you are paying $6,000 per year just to service your debts.   Essentially, in the two above situations, you would likely lose the equivalent or more of your tax refund throughout the year.   Of course, unless you use your tax refund proceeds to file for bankruptcy.

Housing and Automobile Monthly Debt Burdens Can also be Erased

In the past, we have seen many of our clients use their tax refund to file for bankruptcy and reduce their housing or automobile expenses all at the same time.  Bankruptcy usually only costs $975 or less on the attorney portion at our office.   The remaining $2000-$3000 of many of our client’s tax refunds have been used to purchase a paid-in-full automobile.   Other times, the remaining portion has been used to move into much more affordable housing.   Tax refund time is the perfect time of the year to make major changes to your life that will reduce your monthly debt load.

Make This Year’s Tax Refund Go Farther Than Any Other

If you have an impossibly high debt load, do not just keep running in an impossible race.  Make this year’s tax refund go farther than any other refund.  Use it to restructure your finances and declare for bankruptcy.   It will reduce your monthly debt load.  It will also reduce your stress to allow life to be enjoyable again.




Financial Action Plan, Game Time!


Financial Action Plan

The final step to a complete financial overhaul is the Action Plan.   The action plan is where the “rubber meets the road.”  If you have followed the previous lessons in the series, you have grown in knowledge.   You have also grown in determination to live your financial life in totally new ways.  It’s game time!  Now you need to make a reasonable action plan that you can carry out in the next year.  This section is critically important for a true financial overhaul after bankruptcy!

Make a Simple Plan You Can Commit to Follow

In order for your action plan to be successful, make sure it is simple and easy to follow.  Set your goals out 3-6 months.  Set goals out for one year.   Never exceed these amounts – at least at the beginning.

Do not set complex goals where you do not understand certain steps in how they will be completed.  Keep it simple!   Plan to learn about a topic before you set goals within it.

For instance, do not make a plan where you will be a successful marketer or web designer making $150,000 by the end of the year.  Instead, plan to attend every web and marketing conference within the Midwest area, learning what it takes to be a successful marketer.   Then, plan on engaging 5 clients within the year with excellent results.  This goal is an example of a goal that is achievable.  With a goal like this, you are not leaving out several steps.   Then, set your $150,000 goal for the next year or the year following.

As another example, do not plan on increasing your passive income by $3,000 by the end of the year.   Instead, plan on decreasing your expenses to the absolute lowest amount possible.   Then, set a plan to pursue any form of passive income within the near future – no matter how small.  If you have drastically decreased your expenses and obtained any form of passive income, this is still a major accomplishment within a one-year time frame.

Set High Goals

Although your goals need to be simple, you can set them high goals when the time is right.  Acquire knowledge and experience within a particular area.  Then, the sky is the limit!   Make sure to set high goals.  These goals may not follow what other people are doing around you.  Still, if your goals are well-thought out, you may be able to excel in areas where other people only settle for much less.

Make Sure Your Action Plan is Also Possible and Reasonable

While you set high goals, always keep your action plan possible and reasonable.  If you cannot reasonably think out a set of circumstances where your goal will come true, then you are possibly thinking too much “in the clouds.”   Keep your goals down-to-earth and base them on observable facts.   For instance, if your local market cannot sustain your goal, your goal may simply be ill-thought or impossible.  Adapt to the financial knowledge that you obtain and then act on it with well-thought-out plan.

Plan to Make a New Action Plan Every Six Months

Even if you have year-long and multi-year goals, it is important to review your situation and adjust your plan every six months.  This six-months principle will allow you to adjust and stay focused, but also give you sufficient time to make headway in your goals.   Goals must change and circumstances change and your financial knowledge increases.  Make sure to use this six-month principle to make your goals adapt accordingly.

Conclusion: The Sky is The Limit!

If you have truly applied the principles taught in this financial overhaul series, then the sky is the limit!   Instead of money always working against you, the future will have money working for you.  Make plans every year for your net worth and your passive income to increase.   They will.   Make plans to increase in useful financial and business knowledge each year.  It will increase.   Being responsible and productive with financial matters will take you to new heights that you never thought were possible before.  Go all in – it will be worth it!


Financial Overhaul: Course 6

Do The Opposite of Everyone Else

Another step to your successful financial overhaul is also very simple: almost always do the opposite of everyone else.   Although this is a very simple concept, it is still very difficult for most people to carry out.  Many people are fearful and skeptical of doing almost exactly the opposite of what everyone else is doing.  This fear comes from the “leaving the herd” mentality.  It seems like it’s always safer to follow the heard.  However, doing the opposite of the majority is absolutely critical for your financial growth.  It’s also, ironically, a much “safer” approach to finances.

Financial Overhaul - Do the Opposite of Everyone Else

The “Herd” Will Lead You Off the Cliff

Have you ever heard of the American-Indian buffalo hunting story where the Indians herd the buffalo over the cliff?   When you are in the “herd” mentality, you have little or no control of where your financial life is headed.  When financial struggles hit, you will have no where to go except for off the cliff with everyone else.

A good example of this was the mortgage crisis that exploded at the end of 2008.  The trend of the 2000’s was to acquire 100% financing with adjustable-rate mortgages when buying a house.  It appeared to be a completely acceptable financial decision: everyone was doing it.

Then, the market crashed. The adjustable rate, 100% mortgage backfired with a vengeance.  Real estate values decreased.  Because nobody put money down, the properties where immediately “underwater” with negative equity.   Foreclosure and bankruptcy became increasing popular.  The financial “herd” literal fell over the cliff by the thousands nationally.

The road to financial success is more rarely traveled: there will be few people on the road with you.  Just because 99 out of 100 people are not with you stay confident.  You are exactly on the right road to a better financial future.   This road will not lead you headlong over the cliff of financial failure: it will lead you to a better financial life.

Examples of the “Opposite”

What is the opposite of what almost everyone else is doing?   It’s simple: save all of your money for investment.  This will allow you to make more money from your new investments.   The cycle never ends: live under your means and invest.   With the investments, you have even more money to invest.    The second part is also very simple: invest in your financial knowledge and understanding to make even more money in the future for investments.

The “herd” mentality is to progressively spend all money that you make on living expenses.  Houses, cars, and toys come in all sizes and price tags.  Most people immediately spend any new income on a “better” version of these things instead of investing.   The “herd” mentality is too progressive increase the household expenses budget.

What is the “opposite” goal?   How about living on 10% of your income and using 90% of your income for investments and financial education?  How soon would you be financially successful if you were willing to make such a commitment?  How do you know if such a goal is impossible before you try to achieve it?  Is the goal impossible or are you simply unwilling to do it?   This may be an extreme example, but it is exactly the way that many financially successful people live their lives.  Soon the financial pie grows until your “10%” becomes much larger than other people “100%” of their income.

As a specific example, what if you decided that you would live with family or purchase a multi-unit apartment building to eliminate most of your living expenses?  What if you negotiated a work-housing deal?    Then, what if you used your money do acquire businesses and real estate assets that pay you passive income each month?   What if you used the time also to save money for a paid-in-full house?   Your net worth and financial knowledge would grow quickly.

What if every other weekend you attend an internet marketing seminar?   What if you attended real estate workshops?   What if you went to national conferences for the business in which you are interested?  How soon would you be a successful leader in your industry?

You would be doing the exact opposite of everybody else, and, consequently, you would be on the road to being financial successful.  Your financial overhaul would be very real and complete.  After you gained such knowledge, you would likely never return to your old ways.

Conclusion: Doing the Opposite of Everyone Else Can Be An Exciting New Change

Most people dread the loss of perceived “comfort.”  Most people are afraid to do the opposite of what everyone else is doing.  These feelings are usually very inaccurate and misleading.  In reality, doing the financial opposite of what everyone else is doing can be an exciting new life change.   It will bring great rewards and new excitement that the “herd” mentality can never deliver.


Quiz 6 – Do the Opposite of Everyone Else

The Final Course will be released soon!

Action Plan – It’s Game Time!  Course 7