The repayment plan in your Chapter 13 bankruptcy details how you plan to pay back your creditors. It is imperative that you make the payments as promised, or your bankruptcy could be dismissed by the court and you could lose out on the financial relief you were seeking. If you have fallen behind on your payments, here are some options for handling the situation.
File for a Discharge
In a Chapter 13, you do not receive a discharge of secured debts. Secured debts are backed up by collateral, such as your home. The repayment plan gives you the chance to pay off those debts. However, if you are unable to make those payments, you can ask for a hardship discharge.
To determine if you qualify for a hardship discharge, the bankruptcy court will review your financial records and whether or not giving you the discharge would be best for you and your creditors. If the court feels that paying back the debts would lead to financial hardship for you, you can have those debts you have remaining discharged.
Change Your Plan
Another option you have is to ask for a change to your repayment plan. The change could result in your payments being lowered and the amount of time you have to pay being extended. To ask for the change in your plan, you have to file documentation with the bankruptcy court showing why you need the modification.
For instance, if you recently lost your job and are unable to find a new one, provide documentation from your former employer and your financial records to show that you are unable to make the payments as usual.
If you cannot change your plan or you are denied the hardship discharge, you can choose to let your bankruptcy be dismissed. Once it is dismissed by the courts, you can re-file it. You do not have to re-file right away. You can wait until you are in a better position to make the payments. It is important to note that you could be at risk of facing legal action from your creditors while you wait to re-file your case.
Consult with an experienced Chapter 13 bankruptcy attorney like John G Rhyne Attorney At Law to determine which option will work best for you. It is best to take action as soon as possible because if you fail to act in a timely manner, your options could be severely limited.