When you make the difficult decision to file for bankruptcy, you may be relieved to know that this process can help you get your debt under control and relieve the feeling of knowing you can’t make payments. However, when you find yourself struggling to make your Chapter 13 payments, this feeling of helplessness can start anew. As such, if you can’t afford your Chapter 13 payments, the following blog explores your legal options during these complicated times. In addition, you’ll learn the importance of working with a Memphis, TN Chapter 13 bankruptcy lawyer to help guide you through these difficult times.
What Is Chapter 13 Bankruptcy?
When you are in debt, one of two options to file for bankruptcy as a consumer is Chapter 13. This is a repayment-based plan that essentially reorganizes your debts into one lump sum, which you will pay off in monthly installments. Generally, this plan will last three or five years based on the circumstances of your filing and your monthly income. If you earn less than the median income for your state, you will be placed on a three-year plan, while earning more than this average will place you on a five-year plan.
You should note that even if you are placed on a three-year plan, you may want to opt for a five-year plan. This allows you the opportunity to catch up on payments for secured loans like your car or home, allowing you to avoid having these assets repossessed after your case closes. Additionally, this allows you the opportunity to retain your non-exempt assets, as it gives you the ability to pay your unsecured creditors as much as they would have received had you filed Chapter 7.
What Are My Options if I Can’t Afford the Chapter 13 Payment?
In the event you have filed for bankruptcy and are exploring your options, you may discover that the proposed Chapter 13 payments are too high. If this is the case, your option is generally limited to filing Chapter 7 instead.
However, if you are already on a Chapter 13 payment plan and the monthly amount has grown too expensive for you to afford, it’s imperative to understand your options. Generally, the first option is to convert to a Chapter 7 case. While this can help you avoid the astronomical monthly payments, you’ll find that this can put your property at risk.
In some instances, if unforeseen circumstances arise that drastically impact your ability to make these payments, you may be able to qualify for a payment deferment or modification, which can provide temporary relief as you navigate financial emergencies. In other circumstances, you may be able to receive a hardship discharge, which grants you the opportunity to have your case discharged early.
If you are struggling with your Chapter 13 repayment plan, connecting with an experienced attorney with the Arnold Law Firm is imperative. Our team understands how difficult these matters can be to navigate, which is why we are committed to assisting you through these difficult times. When you need assistance, do not hesitate to connect with us to learn how we can help you reap the full benefits of bankruptcy.
