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What happens if you can’t pay Chapter 13 bankruptcy payments?

On Behalf of | Aug 24, 2021 | Bankruptcy

Imagine taking the time to set up a Chapter 13 bankruptcy. You get yourself onto a payment plan that you can afford, and it’s going well. Then, you lose your job or suffer another financial blow, and it throws your finances into disarray.

If you have filed for Chapter 13 bankruptcy, then you know that you have to pay a set number of payments over the course of three to five years. If you fail to make those payments, then the bankruptcy could end. You could have any bankruptcy protections removed and would be right where you were at the beginning of the case.

On the other hand, there are times when the court may be willing to work with you.

Can you modify or suspend your bankruptcy payments?

In some cases, yes. You will need to talk to your attorney about filing a motion to suspend or modify your Chapter 13 bankruptcy plan as soon as possible. There is a strict process that will need to be followed, and it may be that you don’t qualify.

In other cases, it might be possible to get a hardship discharge or to switch to Chapter 7 bankruptcy.

How do you switch to a Chapter 7 bankruptcy plan?

If your financial situation has changed and you now only have a small income or none at all, you may qualify for Chapter 7 bankruptcy. If your attorney thinks it’s prudent, you may want to ask the court to modify your plan into a Chapter 7 bankruptcy. Then, any nonexempt property you currently own will be liquidated, and you will have any remaining qualified debts cleared.

Remember, to qualify for Chapter 7 bankruptcy, you do need to pass a means test.

Struggling with your bankruptcy payments? Ask for help

If you are struggling with your bankruptcy payments, you need to ask for help as soon as you can. It’s better to take action sooner so that you have a greater number of options open to you. You may find that there is a better solution that allows you to move forward with your bankruptcy and resolve your remaining debts.