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Falling Behind on your Chapter 13 Payments

The payment plan in a chapter 13 is the core of the bankruptcy case.  The payment plans lays out how much each creditor will receive, how long the debtor will have to pay, the value of the debtor’s property, and more.  The amount you pay will be based on your “disposable income.”  As the petitioner your goal is to stay current with your payments to the trustee, which are usually monthly. Included in your monthly payments will be payments made to your attorney instead of paying your attorney up front in a Chapter 7.  Once you have successfully made each payment on time, you will be granted a discharge on remaining debts.

Unfortunately, clients often fail to follow the payment plan and find themselves in jeopardy of having their case dismissed.  However, do not panic, there are still options available depending on your current financial position, and if you qualify.

For starters, if there is unexpected emergency don’t be afraid to request more time to catch up on your delinquent payments.  Courts understand there are temporary emergencies and will work with you to get back on track if you notify the court promptly.

Second, you might have the option to modify your chapter 13 plan when you involuntarily lost your job, or you wages were significantly reduced.  With that said any new payment plan will need to be provided with documentation to support the change.

Third, if the payment plan is no longer feasible and you qualify, then converting your case to a chapter 7 can give you a quick discharge.

Fourth, is to request a hardship discharge but is extremely difficult to accomplish.  Usually, if none of these options are possible then you might have no choice but to dismiss your case and refile.  Make sure to notify your attorney immediately if you are in jeopardy of falling behind in your payments so they can evaluate your best option.

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