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What are a debtor's obligations in Chapter 13 bankruptcy?

The range of emotions for the many Colorado residents who are facing financial challenges often varies widely. Some may feel a sense of shame for being behind in monthly bills, while others justifiably feel confused at how they ended up in the situation. Often times, the financial struggles are not caused by the fault of the person, as an unexpected medical event or other incident can throw a person into financial straights.

Fortunately, no matter what the reason behind the debt, Chapter 13 bankruptcy offers a fresh financial start for those who qualify. Nonetheless, a surprising new study indicates that a person's expressions during the bankruptcy could potentially impact whether their replayment plan is approved by the bankruptcy judge.

The study presented a fictional family going through bankruptcy to 137 bankruptcy judges around the country. The study showed that a slightly higher number of judges approved the family's repayment plan when the family apologized, versus when the plan was submitted without an apology. The difference was negligible, although the study's authors discussed how judges may base their decisions on complex criteria.

To be sure, there is no requirement for debtors to apologize in bankruptcy. There are a number of important obligations for a debtor, however. First, a number of forms and documents must be filed to petition for Chapter 13, which includes an array of financial information. The debtor must also pay a filing fee of $235, as well as an administrative fee of $39.

Finally, the debtor must repay his creditors according to the plan. If the debtor fails to continue to follow the plan, the case could be dismissed by the judge. Accordingly, this is the primary obligation a debtor has when seeking a fresh start under Chapter 13.

Source: Wall Street Journal, "Do apologies matter in bankruptcy?," Katy Stech, Feb. 15, 2013

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