What Happens if I Cannot Make My Chapter 13 Monthly Payments?
Chapter 13 payment plans are court-ordered and supervised. Therefore, defaulting on such a plan could have dire consequences. First, creditors can request permission to foreclose on your property, repossess vehicles, and your case might be dismissed.
If you cannot make your scheduled payment, you still have options. The most important thing to keep in mind, however, is that you cannot ignore your obligation to pay.
Know the Consequences of Defaulting
There are consequences if you default; therefore, it is in your best interest to do what you can to never default on your obligation. Consequences might include:
Non-confirmation of your bankruptcy case. If you do not satisfy the payment plan, then your confirmation from the trustee might never be issued.
Creditors can seek relief from the Automatic Stay rules. During bankruptcy, the Automatic Stay provides you with protections from harsh collection tactics. If, however, you default on your plan, the creditors can request relief and continue collections.
Your case might be dismissed. Even after confirmation, a bankruptcy case might be dismissed if you default on Chapter 13 payments.
Can’t Pay? You Have Options
If you cannot afford to pay your Chapter 13 repayment amount, you still have options available to you. Realize that the courts do not want you to default; therefore, they are willing to work with you to help you repay balances. However, the court will only extend their support when you request early. If you allow the accounts to go into default severely, the court may assume that you are not serious about repaying your debts.
The moment you realize you cannot pay, talk to a bankruptcy attorney. Some options that might be available to you include:
Request time to cure the default. The trustee overseeing your case might seek a dismissal. However, you will have a hearing where you can ask the court for time to cure the default. This is best if you have been unable to make one or two payments because of an emergency.
Request a modification of the repayment plan. If you have financial circumstances that have changed, your attorney might request a modification.
Convert to a Chapter 7 filing. If your financial situation has changed severely, you might qualify for the Chapter 7 income requirements.
Request a hardship discharge of the Chapter 13 case. In some situations, the courts might grant a hardship discharge, even if you have not completed the repayment plan. The court reviews your financial situation and decides what is best for you as well as your creditors. Taxes and domestic support rolled into your Chapter 13 are not discharged even with hardship, so you will be obligated to pay those debts.
Struggling with Your Chapter 13 Repayment Plan? Talk to a Local Bankruptcy Attorney
If you find that you cannot afford your monthly repayment amounts, do not default. Instead, contact an attorney with Eskew Law, LLC. Our attorneys can assist you with your Chapter 13 issues, and we will look for ways to help you modify, request more time, or convert your case.
Schedule a consultation with an attorney today at 317-974-0177 or request more information about bankruptcy services online.