After your bankruptcy attorney gets your repayment plan confirmed, you will be expected to make monthly payments to the trustee for the next three to five years. These monthly payments comprise all of your disposable income after allowed expenses are deducted from your income. Because of the strict nature of the Chapter 13 repayment plan, many debtors have trouble meeting the terms for three to five years. If you’re having trouble making payments, you should talk to your bankruptcy lawyer immediately—before you default on your payments. Even if you have already defaulted, there are still some steps your bankruptcy attorney can take to try to fix the problem.
Cure the Default
If you missed some payments due to an emergency situation, but now you’re back on track financially, you might ask the court for some extra time to cure the default.
Reinstate the Bankruptcy
When a debtor fails to make payments as required, the court can dismiss the bankruptcy. You can ask your attorney to request that the court reinstate your bankruptcy. However, this must be done shortly after the dismissal and you must be able to cure the default.
Modify the Repayment Plan
Perhaps you missed some of your Chapter 13 payments because of changes in life circumstances, such as an unexpected illness, job loss, or pay cuts. If this is the case, you should contact your bankruptcy lawyer as soon as possible. He or she can petition the court to modify the repayment plan. By decreasing your monthly payments, you can meet your obligations.
Request Early Discharge
Occasionally, a debtor might qualify for a Chapter 13 hardship discharge. Your lawyer can ask the court to release you from the repayment plan if your unsecured creditors have already received the amount that would have been paid to them under a Chapter 7 discharge. Your lawyer must also prove that it is not feasible to modify the terms of the repayment plan and that you missed the payments due to circumstances beyond your control.
If you’re having trouble making your Chapter 13 payments, contact Cutler & Associates, Ltd. without delay. The sooner you explain your situation to one of our bankruptcy attorneys, the sooner we can act on your behalf to prevent further consequences.