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

A Chapter 13 bankruptcy is different from a Chapter 7 case in that with a Chapter 13 the person filing has to make monthly payments to the Trustee assigned to their case. When a Chapter 13 is initiated, a plan of debt repayment is proposed and eventually confirmed by the Court as a manageable plan. But sometimes, during the pendency of the case, the debtor’s financial situation takes a turn. It could be that the debtor loses their job, gets divorced, or experiences a host of any other life changing events that negatively impact their cash flow. If you have filed a Chapter 13 case and are now not able to make the payments called for in your Chapter 13 Plan, you do have options.

Some things a Chapter 13 debtor can do when they are no longer able to make the payments on their plan include:

•         Asking the Court to modify the plan, to reduce the monthly plan payment and allow the debtor to be considered current on the past due amount. This might require surrendering some property back to a lender that was initially included in the plan for repayment, which is one way to reduce the amount of the plan payment due.

•         Seeking to convert from a Chapter 13 case to a Chapter 7 case. This might also require return of some property that was being provided for in the Chapter 13 plan, but that is not always the case.

If you convert to a Chapter 7 case, you no longer have to pay even a portion of the unsecured debt that was being paid through your Chapter 13 Plan. This savings just might be enough to allow you to keep all of the things you intended to keep, and pay for in your Chapter 13 (like your house and your car), while still receiving the benefits of bankruptcy. For more information, or for help if you are struggling with making payments to the Chapter 13 Trustee, call our office today. We have experience in all types of consumer bankruptcy filings, and know what to do to help you get a fresh financial start.

For more information about chapter 13 bankruptcy, call us today or reach us online at www.law-ri.com. We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.