If you start paying on a Chapter 13 repayment plan, it means that you’re expected to pay a certain amount of money toward your debts for the next three to five years. You are expected to pay on time, which is part of the agreement you have with the creditors and court.
Three to five years is a long time, and lots of things can happen within that time frame. You might lose your job, suffer an injury or have changes in your income. If any of those things happen, you may have a hard time paying the monthly installment on your bankruptcy plan.
I missed a payment…now what?
If you miss a payment, you should know that there is a chance that the entire bankruptcy could be cancelled. That being said, the court does understand that there may be circumstances that are out of your control. For example, if you have a legitimate financial emergency that prevented you from paying, the court typically will allow you time to catch up or restructure your payments. On the other hand, if you spent the money because of poor planning, the judge is much less likely to have a positive response.
It could be possible for you to modify the repayment plan if you feel that you’re having a hard time paying what you owe. For instance, if you lose your job, you may want to reach out to your attorney to petition to alter the repayment plan. The plan’s payments will have to be recalculated to consider your lower wages. The trustee handling the case will need to agree to the changes.
You may be able to convert to Chapter 7 bankruptcy
If you’re having trouble with your bankruptcy plan, let someone who can help you know. There may be more options than you think that can help you get out of debt and back on track financially.