What to do if you can’t make your Chapter 13 payments

What happens if you become unable to pay your Chapter 13 bankruptcy payments? At Rothschild & Ausbrooks, PLLC, this is a question we hear often from beleaguered clients in Tennessee. The bankruptcy process may be stressful enough when things are going smoothly. If you are trying to hold onto your home and other assets in a Chapter 13 bankruptcy, unexpected financial difficulties can only increase this fear and stress.

What might cause you to become unable to make the payments you had negotiated during your Chapter 13 bankruptcy? You may have been given a pay cut by your employer, or perhaps you lost your job. You might find yourself dealing with unexpected medical bills.

Is there anything you can do about it? According to Bankrate, if you become delinquent on a major debt, such as a car payment or home mortgage, the bankruptcy trustee handling your payments might file for your case to be dismissed. This would make you responsible for your debts without the protection that a Chapter 13 bankruptcy gives you. Therefore, it is crucial to try to catch up on your payments as soon as possible.

If your situation is unavoidable, it would be a good idea to let the court know about what you’re going through. You might be able to file a motion to modify or suspend your payments until you get back on your feet. Documents that prove a reduction in your income or a new debt may be sufficient proof that you need help with your case. If your financial situation is long-term, you may qualify to convert to a Chapter 7 bankruptcy.

Your debts do not disappear if you are unable to make your Chapter 13 payments, but you may have options that can help. Learn more about repaying your debt through Chapter 13 bankruptcy by visiting our page.

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