It takes discipline and planning to live within your means and stick to a budget, and it’s easy to get off track, especially if you experience an unexpected setback like a job change or health challenges. Sometimes no amount of planning will eliminate sudden or gradual debt. Even if you do “OK”, you may see that your finances need to change before you find yourself in trouble. If you have income to meet part of your debt, but can’t make full payments each month, it may be wise to look into Chapter 13 bankruptcy. This will reconfigure your debt based on your income, reducing your monthly payments. You will make these lower payments over 3-5 years, and at the end of that period, the remaining unsecured debt will be paid off. Filing Chapter 13 can also help eliminate or reduce your debt while protecting your property and assets.
We will present a reasonable payment plan to the court trustee, but there is no guarantee that changes in living circumstances will not make these payments uncontrollable later on. If you are unable to make a Chapter 13 payment, the guardian of the court may dismiss your case. At this time, your creditors can apply for waivers from automatic stays, which means you’ll have to get current payments or face foreclosure or repossession.
Change Your Mind
If you are no longer able to follow your payment plan, you have several options. Using your current situation, we can perform an average test to determine if you qualify for a Chapter 7 conversion. Chapter 7 will terminate your payment plan and waive most types of debt. If you’ve already secured a loan for your car or house, you may have to give up this property, but we may be able to use permitted exceptions to avoid this. Also, if these payments are really outside your budget, it’s probably best to get out of the way.
Before making any financial decisions, it is important to think things through; You can only convert your case once, so planning the timing is very important. To convert your case, we will notify the court by filing a Conversion Notice or Motion to Convert. The cost to convert is rather low, and some complainants receive refunds of recent Chapter 13 payments that have not yet been sent to their creditors. When you apply for Chapter 7, you can also include any new debt you have incurred since your Chapter 13. This process takes a few days, and then you will be free from your payment plan.
Flexible Choice
No one goes into debt with the intention of not making payments, but life can lead to some unexpected things. In this case, Chapter 13 gives you the opportunity to make some payments while getting relief from a debt that has become too heavy for you. Even after making this choice, things sometimes change again and Chapter 7 becomes your best bet. The US Bankruptcy Court has many plans available to help consumers with their debt, and I can help you manage your finances through bankruptcy.