After Filing Bankruptcy, Chapter 13, Do I Still Pay My Bills?


Recently, during a free evaluation, I was asked by a potential client if he had to make payments on his bills when filing Bankruptcy, Chapter 13 specifically.

 

First, I had to determine what he meant by “Bills”.  Bills go by many different names, there are bills that you pay for on going service, like utilities, cable, cell phones, and then there are other debts, like credit cards, car loans, home loans.  For bills paid for ongoing service, after filing bankruptcy, you still have to pay those if you want that ongoing service.  Filing bankruptcy will not effect your utilities, for example, as long as you make the regular payments.

In Chapter 13 bankruptcy, you would make those payments outside the Chapter 13 Plan.  In Chapter 13 bankruptcy, you enter into a payment plan, usually between 3 to 5 years long, where you make monthly payments back on only a percentage of what you owe to your other bills, like credit cards.

It is possible in a Chapter 13 bankruptcy to pay nothing back to your credit cards, if you can show in your bankruptcy petition that you do not have disposable income sufficient to pay money back to your credit cards and other unsecured creditors.

The amount you pay back on the debts to your credit card companies, medical bills, debt left over from a vehicle repossession or broken lease on an apartment, is all determined by your monthly disposable income.  One of the main reasons people hire a bankruptcy lawyer to represent them in Chapter 13 bankruptcy is to determine what their monthly disposable income is and construct a Chapter 13 payment plan that they can comfortably afford, but still meet the requirements under the plan.

Other debts, like cars and house payments can be included in the plan, and in some cases you can save a good bit of money on your car loan if you include it in the Chapter 13 plan.

So, in answer to the question, you still have to pay debts for ongoing services you receive and would like to continue receiving, like utilities, cell phones, and cable bills, but you do not have to continue to pay on credit card debt, medical bills, repossessions, or broken leases because those debts will be handled in the  in Chapter 13 Plan, and can usually be paid at greatly reduced amounts.

Creative Commons License photo credit: brendan-c

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