What If You Cannot Fulfill Your Chapter 13 Repayment Plan?

11 February 2016
 Categories: Law, Blog


A Chapter 13 bankruptcy is not complete until you finish paying all the debts included in your repayment plan. Unfortunately, some people struggle to make the payments and put their bankruptcy filings at risk. If you are currently on a repayment plan and are having trouble making payments, here is what you need to know. 

What If You Miss Your Payments?

There are several possible consequences that you could face if you fail to make the agreed upon payments in your repayment plan. For instance, the court might choose to dismiss your case. A dismissal means that your bankruptcy and the protections that it offers are no longer in effect. 

As a result, you could suffer other consequences. The automatic stay that prevented your creditors from taking legal actions against you could be lifted. For instance, if your mortgage lender was in the process of foreclosing on your home, then it can continue with this action. 

In a Chapter 13 filing, unsecured debts are usually discharged when the repayment plan is complete. However, if you do not complete it, those debts remain on your credit history and you could have trouble securing debt in the future. You will also be legally responsible for those debts. 

What Can You Do?

One available option is to ask the court to lower your payment. In order to qualify for this, you have to show that you have the disposable income necessary to make the new payments. You also must show that you have a situation that is going to be permanent that can impact your ability to pay. For instance, if you are forced to work a lower paying job, you would qualify.

You can also request a plan moratorium. The moratorium would temporarily stop your plan and not have it impact your bankruptcy. This is idea if you have a temporary situation, such as injury that will impact your income for a few weeks, that would prevent you from making your payments on time. 

Another possible solution is to ask for a hardship discharge. The discharge would allow the court to dismiss some or all of your debts. The end result would be that you would not be responsible for them going forward. 

To qualify, you must show that you have a situation that is permanent and serious that will prevent you from making the payments as agreed. For instance, if you are permanently disabled and unable to work, you could ask for a hardship discharge. 

Consult with a bankruptcy attorney, like at http://www.tblakelaw.com, as soon as you are sure you cannot make the agreed upon payments. He or she can explore your options with you and help you choose what is best for your situation.