What If I Can’t Make My Chapter 13 Plan Payment?

There are two types of consumer bankruptcies, a Chapter 7 and a Chapter 13. Chapter 7 cases are usually the preferred case, because they last a shorter time and allow you to get rid of all of your unsecured debt. A Chapter 13 case can last up to five years, and will only let you discharge a portion of your unsecured debt. In a Chapter 13 case you will be required to repay at least a portion of your unsecured obligations, but many times that portion is a very small amount of the total debt owed. The way it works is that you propose a repayment plan, setting forth what you will repay to your secured lenders and what percent of debt will be sent to your unsecured creditors. The Court will approve the repayment plan, and you will begin making a monthly plan payment to the Chapter 13 Trustee. The Trustee will send payments to all of your lenders, out of the money you pay each month on your plan payment, and this will keep you in good standing with your lenders. It can be nice to pay only one payment for all of your debts, and then handle your daily expenses on our own. But it can be hard to do if you do not bring in enough money to cover the plan payment, in which case you will need to take corrective action in your Chapter 13 case.

If you are not able to make your Chapter 13 plan payments, you should:

•         Request the Court set the payment at a lower amount. This is done by filing a motion in your case and might include the need to modify the terms of your Plan.

•         Request the Court allow you to convert your case to a Chapter 7 case.

Both of these choices require action to be taken on your behalf, and we have the know-how to get these things done. We understand that even if you were able to make the payment when the Court approved your Chapter 13 Plan, things don’t always stay the same. If you have had a change in circumstances during your Chapter 13 case that make it impossible for you to maintain the original plan payment, let us know. We will pursue other options, while still keeping your creditors at bay.

For more information about Chapter 13 bankruptcy, contact us at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.