What If I Can't Afford My Chapter 13 Payments?

Deciding to file for bankruptcy is an incredibly difficult decision that could have a lasting impact on your future. However, while bankruptcy is often associated with negative connotations, it actually provides life-changing second chances to people suffering the consequences of financial debt.

Chapter 13 isn’t the most popular bankruptcy option, but it does grant debtors a 3-5-year grace period to pay off the extent of their debt. Because this is a repayment plan, Chapter 13 is only available to people with regular sources of income. Debtors who successfully complete their repayment plans can effectively protect their assets and property from Chapter 7 liquidation.

But what happens when debtors can’t afford the monthly payments to their creditors? When a repayment plan is initially drafted, it doesn’t include arrangements for unanticipated life circumstances or emergencies. For example, it doesn’t prepare debtors for financial complications related to unemployment, job changes, medical complications, or divorce.

Luckily, you have 3 options if you’re having trouble making payments:

Option #1: Request a Chapter 13 Debt Modification

With the assistance of your bankruptcy attorney, you can make a motion to modify your repayment plan to a more affordable amount. You must provide proof to the court and your trustee that your new financial situation is lasting. Be prepared to submit a new budget plan to the court that accounts for your change in circumstances.

Option #2 Suspend Your Payments

This is the preferred option if your financial troubles are only temporary. Your bankruptcy attorney can help you develop a reasonable argument and present it to the bankruptcy court and your trustee. If your petition is successful, you may receive a 1-2-month suspension.

It’s important to note that a debtor with a 5-year plan can’t extend their payments. Rather, their monthly payments will increase to account for the difference.

Option #3: Convert to Chapter 7

Depending on your personal and financial circumstances, you may be able to convert your bankruptcy from a Chapter 13 case to a Chapter7 case. This option is primarily for people who are incapable of making their plan payments or can no longer participate in gainful employment due to a disability. By filing for Chapter 7, you give the court and your trustee permission to liquidate your assets to pay off your creditors and absolve your debts.

Contact a Bankruptcy Attorney for Legal Guidance

Contact The Buchalter Law Group if you’re planning to file for bankruptcy or have concerns about making your Chapter 13 payments. Our Brevard County bankruptcy lawyers have over 35 years of legal experience and can help you successfully navigate this difficult process.

Call our Brevard County bankruptcy lawyers at (321) 320-6088 to schedule your free case evaluation.

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