At the onset of your Chapter 13 bankruptcy case, you and your lawyer may work together to compute a repayment schedule most fitting for your financial situation. Once you submit your proposal to the Kentucky bankruptcy court, it may confirm whether the plan is financially feasible before confirming it. Even with this diligence and all precautions taken, once you are right in the middle of your bankruptcy proceedings, you may find your plan to be too financially taxing and demanding. If this is your current predicament, please follow along to find out your options if you cannot afford your repayment plan and how a proficient Louisville, Kentucky Chapter 13 bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you avoid getting into any unnecessary trouble.

Why might I not pass the Chapter 7 means test?

As you begin struggling to keep up with your Chapter 13 repayments, you may question why you did not qualify for Chapter 7 bankruptcy in the first place. Well, the answer is likely that you did not pass the means test. This test compares your household’s current monthly income with the median income for a household of the same size in the state of Kentucky.

So, even if you deducted certain allowed expenses, as well, to calculate your disposable income, you may have landed above the average. In response, the bankruptcy court may have requested that you convert your petition to Chapter 13 bankruptcy, since this test likely confirmed that you can afford to pay back your outstanding creditors.

What are my options if I can’t afford my Chapter 13 repayment plan?

Even if the Kentucky bankruptcy court judges that you can handle a Chapter 13 repayment plan, the reality of the situation may be the opposite. While a single missed payment that is quickly covered may not trigger any consequences, anything more, and you may prompt the court to dismiss your case altogether. To avoid this worst-case scenario from playing out, you may explore any one of the following options:

  • You may petition for a repayment plan modification to reduce your monthly payment amount.
  • You may petition for a repayment plan modification to extend the repayment time from three to five years.
  • You may petition for a repayment plan modification to lower the total payment amounts for your nonpriority, unsecured debts.
  • You may petition for a repayment plan modification and claim a significant and unavoidable hardship to get a debt discharge.
  • You may petition for the court to redo the means test and convert your Chapter 13 bankruptcy into a Chapter 7 bankruptcy case.
  • You may petition for the court to allow your voluntary dismissal of your Chapter 13 bankruptcy case and handle your debt repayments independently.

If this blog has deeply resonated with your personal situation and concerns thus far, please reach out to a talented Louisville, Kentucky consumer bankruptcy lawyer for more information. The team at Schwartz Bankruptcy Law Center will be glad to represent you in your upcoming legal case.