Going through a financial change can happen to anybody, and as a debtor going through bankruptcy, it can be even more stressful. With Chapter 13, it´s important to have a payment plan that provides flexibility. Flexibility is what you get when you file a Chapter 13 bankruptcy so that you can pay everything as agreed.
Knowing that you are able to obtain flexibility does not mean you should skip payments. Because if you do, then you may cause the trustee to have your bankruptcy dismissed. Although there are many reasons for dismissal, you don´t want a dismissal to move forward just because of a default.
It is important to realize that after dismissal has occurred, the protection you get from the bankruptcy will be lost, and the creditors you were paying can make suit against you. But the good thing is that you have other options that can help you avoid any negative impact caused by default, which is listed below.
Your Chapter 13 bankruptcy can be converted to a Chapter 7 Bankruptcy
When you wish to convert to Chapter 7, the judge will often grant it when you can prove that your financial situation has changed or that it is now difficult for your payments to be made regularly. When a judge decides a reasonable cause has been determined, a conversion will occur.
When a conversion takes place, it is important that you get in touch with a bankruptcy attorney who has the experience to help you convert to a Chapter 7.
Your Payment Plan is Amendable
If you feel like you will default, you can request that your payment plan be amended. By having an amendment, you can make an adjustment to the payments you make and the schedules in which payments are made. An amendment is great if your job decides to cut back your hours or if you work part-time. An amendment allows you to have lower monthly payments. Your trustee and creditors will receive your approved motion for leave for a plan amendment when granted.
Request a Dismissal Voluntarily
As soon as you feel like you no longer need to make payments, a dismissal can be requested. Having a dismissal done voluntarily can be completed whenever you want. Depending on your financial situation, you may find yourself capable of making your payments on your own once dismissal has taken place. If that is the case, then continuing a payment plan would not be necessary.
Conclusion
Although defaulting on Chapter 13 can be seen as a bad thing, it does involve other options that allow it to be flexible. If you are currently undergoing Chapter 13 and wish to have any changes or amendments, contacting us today will be your best option.