What if I fall behind on Chapter 13 repayment plan payments?
Bankruptcy | December 17, 2019
A Chapter 13 bankruptcy is also called a “wage earner’s plan,” because it allows for filers who earn a regular income to pay back their secured debts over a period between three to five years. In a Chapter 13 debt, unsecured debts are eliminated, but secured debts must all be paid back. The primary benefit in a Chapter 13 bankruptcy is that that filer will be able to keep their home.
Staying current on Chapter 13 bankruptcy payments, however, is not always easy – or – possible – for some filers. In the event that you have fallen behind in your Chapter 13, you have options. However, it is important to act quickly because if you get too far behind a creditor or your bankruptcy trustee may ask the court to dismiss your bankruptcy case. Several options for filers who have fallen behind on their payments include:
- Catch up on your payments – Some people miss payments due to a temporary financial emergency. While asking for time to catch up on missed payments may sound like an obvious solution, many filers fear discussing their inability to pay with the bankruptcy trustee. Most trustees are reasonable and want you to succeed. If a motion to dismiss is filed, you can respond with a written motion to opposing dismissal, explaining that you can catch up on payments if given additional time.
- Modify plan payments – If you believe that you will not be able to catch up on payments because you have lost your job or suffered another long-term decrease to your income, you can ask the court to modify your Chapter 13 payments. This will require you prove to the court that your circumstances have changed, and propose a new plan.
- Request a hardship discharge – Although somewhat uncommon, you may be able to convince the court to discharge some of your debt based on hardship. However, the court will consider your request in terms of what is in the creditor’s best interest. Thus, unless a creditor has been paid at least as much as they would have in a Chapter 7 bankruptcy, a discharge is unlikely.
- Convert to a Chapter 7 bankruptcy – Unlike a hardship discharge, if a bankruptcy is converted to a Chapter 7, the trustee will sell your home to cover unpaid debts. In the event that there are additional unpaid debts that cannot be covered, they will be discharged (with the exception of non-dischargeable debts).
- Allow the court to dismiss your case – If you cannot catch up on your payments and converting your bankruptcy to a Chapter 7 does not make sense in your situation, there is always the option of allowing the court to dismiss your case and then refiling for another Chapter 13 bankruptcy once your financial situation improves.
While falling behind in your Chapter 13 bankruptcy payments can be frightening, there are several solutions available.
If you are currently making payments for a Georgia Chapter 13 bankruptcy repayment plan and have fallen behind in making your payments, do not give up hope. The knowledgeable attorneys at the law firm of Morgan & Morgan, P.C. are here to help. To learn more, call (706) 752-7089.
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