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What If I Can’t Afford My Chapter 13 Payments?

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Through a Las Vegas Chapter 13 bankruptcy, debtors are granted an opportunity to pay off their debt over a three to five year period. During this time, a repayment plan is established and an Automatic Stay is put in place allowing debtors to make monthly payments without harassing actions from creditors. 

In order to qualify for Chapter 13, a person must have a regular income that will allow them to make the required monthly payments on time, however situations can change during the repayment period leaving debtors struggling to make their bankruptcy payments. If you find that you are unable to make your payments, there are limited options that can help you, but you must be sure to address the issue quickly to avoid missed payments or dismissal of your case.  

About Chapter 13 Repayment Plans

When a person files for Chapter 13, they must submit a proposed repayment plan to the court outlining how they will pay back most, if not all, of their debt. Repayment plans typically span three to five years depending primarily on the debtor’s income, nonexempt property, living expenses, and total debt. After successful completion of the repayment plan, some of the remaining debt may be discharged

A trustee is assigned to oversee the case and serves as the point of contact in the event that the debtor’s financial situation changes or difficult circumstances lead to missed payments. 

Options If You Can’t Make Your Chapter 13 Payments?

It is not uncommon for debtors to experience changes in their incomes and financial obligations during their repayment period. There can also be difficult situations that will cause debtors to fall behind on payments. While there are some options for these situations, they are limited and require you to act quickly in order to avoid dismissal of your bankruptcy case. 

Get Caught Up On Payments 

A temporary financial emergency is one of the most common reasons for missed plan payments. If this has happened, contact your trustee immediately to reach an agreement that allows you to get current on payments without modifying your repayment plan. In the event that your trustee will not work with you, you can file a written motion to the court requesting time and outlining how you plan to get caught up.

Request Temporary Suspension Of Payments

Another option during temporary financial problems is to submit a request to the court asking that payment obligations be temporarily suspended. You will need to explain the situation and how you will make up for those skipped payments. 

Request A Modification To Your Repayment Plan 

If your financial situation has drastically changed from loss of job or pay cut, you can submit a motion requesting a change to the monthly payment amount. You will be required to submit documentation proving the changes in your circumstances and outlining the proposed payment modification. If the court does not approve your modifications, however, you will continue to be responsible for the original repayment plan. You must also keep in mind that debt such as child or spousal support or tax debt will not qualify for repayment modification. 

Request A Conversion To Chapter 7 Bankruptcy

If you are unable to make Chapter 13 payments or your request for modifications have not been approved, you may request converting to a Chapter 7 bankruptcy. Under Chapter 7, the trustee will sell your nonexempt property in order to pay off your debt. However, you will first have to qualify by passing a means test. 

Request A Hardship Discharge

In limited cases, you may be eligible to request a hardship discharge in which your case will be discharged even if you have not completed your repayment period. Before approving a hardship discharge, the court will analyze the amount of debt still owed in order to take the best interest of creditors into consideration. A hardship discharge will only eliminate remaining debt if creditors have already received the minimum amount that would have been paid under a Chapter 7 case. Hardship discharges will not eliminate priority debt such as child or spousal support or tax debt. 

Chapter 13 Bankruptcy Attorney In Las Vegas

If you are unable to make your Chapter 13 payments, be sure to contact your Las Vegas bankruptcy lawyer to help you navigate the process. At Fair Fee Legal Services, we have extensive experience in the Las Vegas bankruptcy process and are able to help you determine the best options and put them into motion. Call us today at (702) 703-3333.