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When you file for Chapter 13 bankruptcy, the court will determine what repayment plan you need to follow, including the amount you need to pay each month and the length of time your plan is expected to last; a good attorney will help you fight for a repayment plan that’s most favorable to you and gives you the most protection from creditors. However, in the course of the Chapter 13 process, you may experience life changes that make it difficult or unfeasible for you to stick to your repayment plan. What kinds of situations may come up?
- You lose your job.
- You’re suddenly faced with medical expenses from a protracted illness or a procedure you needed.
- You need to make a costly repair to your home or purchase a new car after an old one breaks down.
- A loved one passes away, and you receive an inheritance.
Because your Chapter 13 bankruptcy repayment plan isn’t set in stone, changes can be made during the process to reflect new changes in your life. For instance, if you do suddenly acquire more money or assets, the amount of debt you’d have to repay could increase.
And what if you find yourself unable to continue with your current plan because you keep falling short on money? Depending on the details of your case, sometimes you’ll be able to extend your repayment plan, giving you a broader time frame to work with; other times you can get your repayments changed or even suspended for a finite duration.
It could also be that the Chapter 13 bankruptcy is no longer suitable for you, and you’d need to transition to Chapter 7. In some cases, you might also qualify for a hardship discharge, in which you can discharge your debts without going through the whole Chapter 13 repayment plan. But one of the requirements for a hardship discharge is the need to prove to the court that you’re incapable of fulfilling the repayment plan because of some permanent change in your life that’s outside of your control, such as suffering a long-term disability after an accident; even then, certain debts such as those involving child support are non-dischargeable.
If you’re anticipating changes in your Chapter 13 bankruptcy repayment plan, it’s important to contact attorneys to advise you on what course of action is best to push for in your circumstances. Just know that if you are facing important life changes, your Chapter 13 bankruptcy plan can be modified in ways that are more advantageous for you.
