In a Chapter 13 bankruptcy, the court decides how much disposable income you have after careful calculation. They also decide how much you can afford to pay on your debt each month. You’re obligated to pay this amount each month for three to five years, depending on the length of your bankruptcy repayment plan. However, circumstances change and some people aren’t able to continue making those same payments. If that is the case, what are your options?
What Happens If You Just Fall Behind
If you fall behind on your payments without notifying anyone, the bankruptcy trustee may move to dismiss your case. In this scenario, you will owe the full amount of the debts listed in the bankruptcy. Also, you are subject to collection activity, including foreclosure, wage garnishment, tax liens, and more.
How Temporary Is Your Financial Situation?
If you’re unable to pay a month or two of your bankruptcy payments because of a temporary financial situation, you should discuss your issues with your bankruptcy trustee and get back on track when your finances improve. However, this isn’t a long term solution. It’s very short term, and you must contact the bankruptcy court to let them know what is going on.
Modifying Your Chapter 13 Bankruptcy Payments
If you experience a long-lasting financial situation, such as the loss of your job or a serious illness, you may be able to modify your bankruptcy payments. Since your original payment was calculated based on your disposable income at the time, work with your attorney to show how your disposable income changed.
Do You Qualify for a Hardship Discharge?
Although Chapter 13 bankruptcies don’t typically discharged debt, in some scenarios, they can. A hardship discharge eliminates certain types of unsecured debt, much like in a Chapter 7 bankruptcy. Alternatively, you may be able to convert your case from a Chapter 13 bankruptcy to a Chapter 7 bankruptcy.
If you are involved in a Chapter 13 bankruptcy and are unable to make your court required payments, take action. Contact an experienced bankruptcy lawyer at Beecher & Conniff today for a consultation to discuss the options you have available to you. Call now at 253-627-0132.