As part of your Chapter 13 bankruptcy, you came up with a repayment plan, also called a wage earner’s plan, to pay back the debts you owe. Over three to five years, you’re sending in payments so that hopefully, at the end of this whole ordeal, you will be able to rebuild your credit report and score and have a brighter financial future ahead.
There’s only one issue: You’re having trouble making your payments. Now, you’re worried about what’s going to happen. Will your plan be canceled? Will you have to start over again and figure out a new plan of action? Here’s some more information on what to do if you can’t make payments.
What Happens If You Miss a Chapter 13 Payment?
If you miss your Chapter 13 payment, it could have a negative impact on you. The court could dismiss your plan, or switch you to a Chapter 7 bankruptcy. This means that the court has the power to liquidate your assets that are not exempt in order to pay your creditors. When you filed for Chapter 13, this was exactly the type of situation you were hoping to avoid.
What If You Know You’ll Miss a Payment?
Let’s say your payment is coming up, but your boss hasn’t sent out your paycheck yet. Or, perhaps your expenses were higher than usual one month and you simply don’t have the funds yet. You could always reach out to the trustee and tell them the situation. You can then come to some sort of agreement to ensure that this doesn’t keep happening again and you are able to make payments on time in the future.
Unlike with other bills, there is no grace period for payments. You’ll need to begin making payments 30 days after you file for Chapter 13 bankruptcy.
Modifying Your Payment Plan
One thing that may have happened is you lost your job, and you aren’t sure how you’re going to make payments for the foreseeable future. You could potentially ask the court to reduce your monthly payments temporarily until your situation changes. You’ll need to provide the court with proof that your situation has changed.
Refiling for Chapter 13 Bankruptcy
It may be possible to dismiss your current Chapter 13 bankruptcy and refile for it. You might need to ask the court to extend your automatic stay if you refile.
Making Lifestyle Changes
If you make lifestyle changes, you may be able to stay on top of your payments. For instance, downloading the Mint app to track your expenses and coming up with a realistic budget could be helpful. You might also want to start a side hustle to bring in more cash or get a second job. If you can find a higher-paying job, that would be ideal as well. Consider cutting extra expenses like cable, eating out, and travel until your bankruptcy is complete. You may need to move to a cheaper place and sell some of your valuable items to come up to date on your payments too. This may be a rough time where you make sacrifices, but in the long run, it’ll be worth it.
Get in Touch With Richard P. Arthur
Richard P. Arthur, Attorney at Law, will help you with filing for Chapter 13 bankruptcy. You can call 937-254-3738 for a consultation. He has nearly three decades of experience helping clients in Dayton and Trotwood, as well as Montgomery, Greene, Miami, Clark, and Warren counties.