What are My Options if I am Unable to Make My Chapter 13 Payments?

When debtors in the Oak Park area file for Chapter 13 bankruptcy, they create a repayment plan that lasts for a period of three to five years. During that time, the debtor will make regular payments to the Chapter 13 bankruptcy trustee, who will then pay creditors. Once the debtor completes the terms of the repayment plan, remaining eligible debts can be discharged. However, during that period of three to five years, a debtor’s circumstances can change. For example, a debtor might get laid off from their job and may be unable to find work. Or, the debtor might suffer a workplace injury or be diagnosed with a debilitating disease that prevents that debtor from returning to work in a meaningful capacity and earning a regular income that will allow that debtor to continue making Chapter 13 plan payments. In short, circumstances can change, and a debtor might struggle to make regular payments.

If you are currently making payments as part of a Chapter 13 plan but a change in circumstances has occurred, one of our experienced Oak Park bankruptcy attorneys can speak with you about your case. In the meantime, the following are some of the options that could be available to you.

Payment Plan Modification

When circumstances change and are unlikely to return to what they were at the time the payment plan was approved by the bankruptcy court, a debtor can ask for a modification. If the debtor wants to continue forward with the Chapter 13 bankruptcy, a modification is often the best option. This is particularly true for debtors who filed for Chapter 13 bankruptcy in order to avoid foreclosure. You should know that you will only be able to modify your plan under U.S. bankruptcy law if you can provide evidence of a change in circumstances that necessitates the modification. The court can then approve a new repayment plan based on your current earnings and income.

Speak With the Trustee About Delayed Payments

In some cases, a debtor’s change in circumstances is quite temporary. For example, the debtor might have been temporarily furloughed by an employer without pay, or may have needed to take leave under the Family and Medical Leave Act (FMLA) to care for a loved one with a serious illness. Under these types of circumstances, the debtor often anticipates that their income will return, but the debtor needs a temporary reprieve. If this is your situation, you may be able to delay payments by working out a plan with the trustee that involves catching up on payments in a couple of months. Your bankruptcy lawyer can also speak with you about this option.

Convert to Chapter 7 Bankruptcy

If you were ineligible for Chapter 7 bankruptcy when you initially filed for Chapter 13 bankruptcy, a change in your circumstances could mean that you are now eligible for Chapter 7 bankruptcy and thus may be able to convert your case. If you convert to Chapter 7, all nonexempt assets will be liquidated just as they would if you had filed for Chapter 7 in the first place, and you will be eligible to have debts discharged within approximately four to six months.

Contact an Oak Park Bankruptcy Attorney

Do you need assistance with your Chapter 13 case? Our Oak Park bankruptcy lawyers can help. Contact the Emerson Law Firm today for more information.


See Related Blog Posts:

Should I File for Bankruptcy if a Creditor Has Threatened to Sue Me?

Are All Debts Treated the Same in a Consumer Bankruptcy Case?

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