When you file Chapter 13 bankruptcy, you will develop a court-approved repayment plan to your creditors. To determine the amount paid every month and if it will last for three to five years depends on your income, assets, living expenses, family size, and the amount of debt that you have and are behind in.
Problems
During the repayment period, unforeseen things can happen that will knock you off your payment plan. Changes such as job loss, illness, or large unexpected bills can derail your budget.
Bankruptcy Code
The U.S. Bankruptcy Code allows for such unexpected changes and will enable you to modify your payment plan to fit the situation. An experienced bankruptcy attorney can guide you through the process of getting a favorable repayment plan. Your attorney will file a motion with the court to explain your situation and request a modification. If your financial situation changes before your plan has been confirmed with the court, your attorney can file an amended plan.
If your plan calls for payments for nonpriority unsecured debt, then there may be a chance these can be reduced while you are struggling with the unexpected financial stress. If it becomes apparent that you will not be able to keep up with the payments, your bankruptcy could be converted to a Chapter 7 bankruptcy.
Chapter 7
If it is approved by the court to change your case to a Chapter 7 bankruptcy, your monthly payments will stop, and all qualifying debt will be eliminated. You will still have to pay your child support, alimony, taxes, and any government fines and fees.
If you have fallen behind in your Chapter 13 payment plan, the court can file a motion to dismiss your case. If your case is dismissed, your debt will not be discharged, and you will be right back where you started before you filed bankruptcy, maybe worse since you will be out any legal and administrative fees you paid.
If you are looking for financial relief from overwhelming debt or falling behind in your Chapter 13 payments, contact a McAllen bankruptcy attorney today to find out how you can get help.