Chapter 13 bankruptcy can help protect your most important assets, such as a home or vehicle. However, it also requires you to complete a three to five-year repayment plan. Each month, you will be required to pay the Trustee, who will then pay back your creditors. During this time, changes in your financial circumstances could make it difficult or impossible to complete your Chapter 13 plan. Depending on the circumstances, you may be able to file a motion to modify your Chapter 13 payments by:
- Decreasing the amount of your Chapter 13 payment by adjusting the amount paid to nonpriority unsecured creditors.
- Temporarily suspending your Chapter 13 payments. It may be possible to receive a temporary moratorium on payments that could last for several weeks. This may allow you time to resolve the financial situation that is causing you trouble.
The requirements for modifying your Chapter 13 plan vary depending on the court. You will need to provide updated income information and reasons for requesting the modification.
Can I Convert a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy?
In some situations, it may not be feasible to complete your Chapter 13 repayment plan even with modifications. You may be able to convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy. Chapter 7 bankruptcy can allow you to discharge certain debts without completing a repayment plan. Depending on the financial situation and other factors, this may be the best option if you run into trouble during your Chapter 13 repayment plan.
If you are struggling with your car payments, mortgage or other debts, the Kansas City bankruptcy attorneys at The Sader Law Firm can help you explore your available options for debt relief.