The Southern District of Texas has introduced a NEW Chapter 13 Plan with a unique Emergency Savings Fund built right into the payment plan.
For the First Time Ever, a chapter 13 repayment plan not only allows, but encourages Debtors to save for emergencies. The Judges in the Southern District have long realized that the main reason most debtors do not complete their chapter 13 plan is because they lack the funds to cover life’s emergencies.
When life’s emergencies happen, Debtors routinely chose to take care of them over paying their Chapter 13 Bankruptcy plan. The Judge’s get this. They understand. However, you still have an obligation to make your monthly chapter 13 plan payments even if you have financial emergencies. If you choose to divert your chapter 13 plan payments to cover your emergencies, it could force the Judge to Dismiss your case. You don’t want that.
The new chapter 13 plan actually allows Debtors to budget $50, $100 or more monthly into their plan payment. Think of this as forced savings. Over time, your emergency savings can accumulate a fair amount of money. $100 a month over 60 months will give you an emergency savings account with $6000 in it. Think about that!
Most financial planners recommend at the minimum that you have $1000 in your emergency savings account. It has long been speculated that most financial emergencies are only $1000 or less. But most planners also recommend that you have 3-6 months of living expenses saved as well. If your expenses are $2000 a month, this would mean you need $6000 to over $10,000 in savings. Most people, on their own, cannot do this. Especially Debtors in chapter 13 bankruptcies. The new Houston Chapter 13 bankruptcy plan takes care of this problem for you.
The Judges have assured that the money you build up in your emergency savings is YOURS! Neither the Judge, your creditors or your Trustee can touch this money. Your chapter 13 Trustees David Peake and William Heitkamp have agreed to set up your emergency savings and administer it. There will be no trustee commission fee charged on this money. You won’t earn any interest on it either, but it will be there when you need it. Also, when your plan is done, ANY money in your emergency savings will be returned to you. This will help your goal of starting fresh after your bankruptcy and will position you greatly in living your new life debt free.
Obviously the money in your emergency savings is yours and you may need to access it in case of an emergency. Procedural rules apply, but the Judges have agreed that the funds will be accessible to your within 15 days. It is mainly designed to reimburse you for emergency expenses you pay for on your own. Think of it as a reimbursement. However, if you cannot cover the emergency on your own and need the funds immediately, the Judges have provided a way to get the funds much quicker. You will need to discuss these new procedure with your Houston Bankruptcy Attorney to find out how.
We are excited to start using the new new Houston Chapter 13 Bankruptcy Plan. It goes into effect 01/01/2015. We will be discussing this new plan with all of our existing and new clients. This new form will require a lot of extra work on the part of Debtors and their lawyers. To help you navigate the new Chapter 13 Plan and to see how it can greatly benefit you, we strongly urge you to call us today to schedule a no-obligation consultation.