Missing one of your monthly payments, required of you in your Chapter 13 repayment plan, may not be the end of the world. However, consistently neglecting this financial obligation may lead to serious consequences. Namely, the Kentucky bankruptcy court may dismiss your Chapter 13 bankruptcy case, or at the very least convert it to a Chapter 7 bankruptcy case. This is why, if deemed necessary, you must file a motion to revise your plan. Read on to discover why you should modify your repayment plan and how a seasoned Louisville, Kentucky Chapter 13 bankruptcy lawyer at Schwartz Bankruptcy Law Center can confirm whether this will work in your favor.
Why should I modify my Chapter 13 repayment plan?
Of note, your proposed Chapter 13 repayment plan may take two months to one year to be officially authorized by the Kentucky bankruptcy court. What’s more, it may take you three to five years to see this plan through. Throughout these months or years, it is understandable for your financial standing to fluctuate. Unfortunately, sometimes this fluctuation takes a turn for the worse. This is all to say that you may have good reason to ask the court to grant a modification to your plan. Examples of such good reasonings are as follows:
- You may have been laid off from your job and therefore lost your main source of income.
- You may have received a serious diagnosis and therefore put a significant portion of your income toward healthcare.
- You may have been hit with a “surprise” debt and therefore did not incorporate it into your initial repayment plan.
- You may have decided to sell certain property and therefore no longer need these payments in your standing repayment plan.
That said, you must provide the court with sufficient evidence that you are struggling with a dire financial situation. Only if your bankruptcy trustee and creditors are also on board may the court approve your requested modification.
When does a modification not work?
Remember that certain debts must be paid off in your Chapter 13 repayment plan. Such debts may include your child support/alimony support obligations; some tax obligations; and mortgage arrears on kept property. So, modifying your Chapter 13 repayment plan may not work if you struggle with these specific, required debts. However, this is not to say that you cannot reduce your monthly payments on your nonpriority unsecured debts. Then, you may use these extra funds to help pay off your required debts.
Sadly, this may still be insufficient if your financial situation is dire. For this modification to work, you may have to give up the property you were paying mortgage arrears. If still not doable, you may have to petition for a Chapter 13 hardship discharge instead. Or, you may have to file for a conversion to Chapter 7 bankruptcy.
Before it is too late, you must retain the services of a competent Louisville, Kentucky consumer bankruptcy lawyer. Contact our Schwartz Bankruptcy Law Center office today.
