What Can You Do If You Cannot Make Your Chapter 13 Bankruptcy Payments?
A major part of a Chapter 13 bankruptcy filing is the repayment plan. The plan details how much you are going to pay each month to the trustee so he or she can distribute it to your creditors. If you fall behind on the payments, your bankruptcy could be dismissed. To avoid this, it is important you take action as soon as you know you cannot make your payments.
Talk to Your Trustee
The trustee is responsible for ensuring that you make payments each month to your creditors. If you cannot make a payment, call him or her immediately. If it is a temporary situation or you are going to miss only one payment, the trustee might give you an opportunity to catch up without involving the court.
If the trustee allows you to temporarily modify your plan, make the payments according to your agreement. If not, the trustee could request a dismissal.
Ask for a Modification
In the event that the changes in your financial situation are permanent, you can ask for a permanent modification to your repayment plan. To do this, you will have to file a formal petition for modification. You must explain what has led to your request and your proposed changes. For instance, you can cite a demotion at work, the birth of a baby, or a disability as the reason.
It is important to note that when you ask for the modification, your eligibility to make the payments will be evaluated by the court. If it is determined that your best efforts to make a payment are not in the best interests of your creditors, the court might take possession of some of your assets. The assets will be sold and the proceeds paid out to your creditors.
Convert Your Filing
If you are not able to make the payments and you can prove that trying to do so would cause an undue hardship on your household, your attorney can file documents to have your Chapter 13 converted to a Chapter 7. This is usually an option if you originally were eligible for the Chapter 7, but chose the Chapter 13 filing to try and maintain possession of your assets.
You have a few other options available to you, including letting the trustee ask for the dismissal. Your attorney can make a recommendation on what you should do based on your financial status, how much you have paid off, and your state's laws. For more information, contact a firm such as Bauer & French Attorneys at Law.
