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Help!  I Filed for Chapter 13 Bankruptcy and Can’t Make My Payments!



When an individual or family decides to file for Chapter 13 bankruptcy, they will work with the bankruptcy court to come up with a new payment plan which will allow them to make lowered monthly payments to their creditors.  At the end of the payment plan period, any remaining debt that the family has been unable to pay back will be discharged (i.e., forgiven) and the family will no longer owe that debt and can move forward with a clean financial slate.

Due to the benefits offered by Chapter 13, many Virginia families decided to file for bankruptcy in the past couple of years due to the increasingly financial strain many households have been feeling due to the economic recession. However, since the economy continues to struggle and hasn’t full received yet, many families have found that they are now unable to meet their monthly payments under their Chapter 13 plans.

Not making Chapter 13 payments is a serious issue as it could result in the bankruptcy trustee filing a motion with the court and asking the court to dismiss the case.  If that happens, the family will lose the protections that the bankruptcy laws provide.  For example, if a family is making Chapter 13 payments, creditors cannot try to collect debts owed to them – but they can if the family stops making the payments.  Therefore, if the family misses a mortgage payment, the bank could initiative foreclosure proceedings.  Read on to learn more about your options if you can no longer make your Chapter 13 payments, and make sure to contact our office today to speak to a skilled attorney who can immediately help you address this serious issue.  We look forward to helping you!

Possible Options When Chapter 13 Payments Become a Burden

Option 1: Consider converting your Chapter 13 bankruptcy to a Chapter 7

When you first started your bankruptcy process, hopefully you consulted with an experienced attorney who was able to explain the two different bankruptcy Chapters to you.  Even though you have already filed Chapter 13, you are permitted to convert your current case to a Chapter 7 provided you do not own a significant amount of assets.  Chapter 7 can be a great solution for many Virginia families because at the end of the process, the family’s debts are complete wiped away so many people emerge from the Chapter 7 process without any lingering credit card bills or medical-related debts.

However, please note that not everyone can qualify for Chapter 7 and if you try to convert your Chapter 13 case on your own and the court finds you don’t qualify, you may have made a bad situation worse.  Call our office today to speak to an attorney who can help you determine if you qualify for Chapter 7.

Option 2: Attempt to amend your Chapter 13 repayment plan

Another option is to try to renegotiate your Chapter 13 repayments with your creditors.  This option can be quite helpful if you do not qualify for Chapter 7, but many people find contacting creditors and having these types of discussions to be very, very intimidating.  Having an attorney on your side to represent your interests and deal with creditors is very appealing especially for those families who are intimidated by creditors or who do not have the time to conduct these repayment negotiations.

Option 3: Ask the bankruptcy court to voluntarily dismiss your case

You can always simply request that the bankruptcy court dismiss your case, but in doing so you lose the protections provided by bankruptcy law that were briefly discussed above.  So even though you will no longer be required to make your Chapter 13 plans if the court dismisses your case, your creditors will still be able to come after you for the debts you owe them.

Important – Do Not Ignore This Problem!

The absolute worst thing a family can do is ignore the problem of not being able to make Chapter payments – the problem will only get worse and the longer you wait to fix the problem, the harder may become to protect your Chapter 13 plan and ultimate discharge.  At the Callan Law Firm, we have helped many families who are in this situation but it is best to act as quickly as possible.

Disclaimer: The information provided on this website should not be construed as a legal advice or representation by the Callan Law Firm, P.C.  Any use of this website does not establish an attorney/client relationship between the user and the Law Firm. We do not accept any professional responsibility for a case unless there is a retainer signed by both parties (Law Firm and client).