More than two-thirds of all people who file for Chapter 13 bankruptcy protection have their cases dismissed before they complete all of their payments. To avoid being one of this majority, you need to make sure that your payments are on time, stay current on your taxes and find a way to set aside a little extra money, even as you repay your creditors. It sounds easy, but it isn't always.

What is Chapter 13 bankruptcy?

Unlike the more popular Chapter 7 bankruptcy, where all of your non-exempt assets are liquidated, Chapter 13 allows you to repay your creditors over a period of up to five years and keep all of your assets. This type of bankruptcy is particularly well-suited to someone who ran into financial problems due to a one-time event, such as an illness or temporary unemployment, but who is now making enough money to both pay his or her regular bills as well as a monthly payment towards old bills.

Under Chapter 13 bankruptcy, you submit a budget and a repayment plan to the court and, if approved, you make monthly payments to a court-appointed trustee who distributes your money to your creditors.

Tips for making it through Chapter 13 bankruptcy

1. Pay your state, local and federal taxes. One way to get your Chapter 13 case dismissed is to not pay your new taxes on time. Even if you have back taxes rolled into your Chapter 13 payment agreement, your case can (and probably will) be dismissed if you don't stay current on your taxes.

2. Get a "side gig." Your Chapter 13 repayment plan will likely leave you little extra money each month for those things that inevitably come up, such as car repairs, home repairs, doctors' bills and increases in your regular bills over the Chapter 13 period. Five years is a long time for nothing to go wrong. That's the main reason most people fail in this type of bankruptcy. There's no room for anything unplanned. Avoid failing by earning a little extra money via a "side gig" to save for unexpected expenses. This can be selling things on eBay, writing ebooks, working one day a week at a local retailer or writing content articles online.

3. Get permission in advance for any post-plan debt. Another deal-buster in Chapter 13 bankruptcy is to take on any additional debt during your repayment plan without first getting the permission of the court and the trustee. Taking out a car loan, a short-term loan or even a pay-day loan breaks the terms of your bankruptcy agreement. If your car breaks down and you need a new one, you can petition the court for the added expense, but don't just go sign the papers without notifying the trustee and/or your lawyer.

The odds against succeeding at Chapter 13 bankruptcy are high. However, they aren't insurmountable. Increase your chances of success by finding a "side gig" to help you set aside a little extra each month for those unexpected expenses and avoid getting in trouble with the IRS. For more information about getting through a bankruptcy, contact a company like Liviakis Law Firm.