You Have the Choice to Take Back Control of Your Financial Future.

What if I can no longer make my Chapter 13 payments?

On Behalf of | Apr 29, 2024 | Chapter 13 Bankruptcy

Chapter 13 bankruptcy can be a good option for Florida residents who know it is time to file for bankruptcy but want to keep certain assets, such as a home.

In a Chapter 13 bankruptcy, your debt is consolidated and you pay it off through a three-to-five-year repayment plan.

This is unlike a Chapter 7 bankruptcy, which discharges all qualifying debt. However, you might be required to sell assets in a Chapter 7 bankruptcy, which could make a Chapter 13 a more attractive option.

But three to five years is a long time to make payments. Life often brings us unexpected events that can negatively affect our finances.

A job loss or increased expenses could leave you unable to make your regular Chapter 13 payments. Fortunately, there are potential options available.

Suspension or deferment

Depending on your situation, you could have your payments suspended or deferred. If the change in your finances is short-term and you expect to resume payments in a few months, a suspension or deferment might be best. This allows you to put off a few payments until you can resume making them again.

If your financial situation is not likely to improve and you do not expect to be able to resume payments, other options include modifying your bankruptcy to Chapter 7 or asking for a hardship discharge.

A hardship discharge involves filing a motion with the bankruptcy court. Prepare to explain your situation and why it is impossible for you to make your payments. If the discharge is granted, you could be relieved of your payment plan before the three-to-five-year deadline.

Do not ignore the problem

Do not skip payments and plan to catch up later. A court could dismiss your Chapter 13 bankruptcy or automatically modify it to a Chapter 7, which could mean you must sell your home or other assets.

Act quickly if you believe you may have problems making any upcoming payments. Talk with your bankruptcy trustee or anyone else who helped you with the bankruptcy process and tell them your situation. They will be able to help you address the problem and figure out a solution.



Kingcade & Garcia | A Miami Law Firm