Living With Your Chapter 13 Plan

Guidelines for Living With Your Chapter 13 Plan

If your circumstances change at any time, you should contact your attorney first.  Your attorney represents you and your best interests, so they are there to help you navigate any problems that come up along the way and work with you to communicate the necessary information with your trustee.

Make full, on-time payments to your trustee each month.  – If you’ve had an unexpected expense come up and you can’t make a full payment, contact your attorney to see if you can make a smaller payment that month.

Make full, on-time payments to other lenders. – If you have a mortgage, a car loan, or any other secured loan, you are obligated under the terms of your Chapter 13 plan to make these payments on time and in full each month.  Failure to do so could result in foreclosure or repossession of your property.

Report significant long-term changes in come to your attorney. – Whether you are making more or making less, you should report all changes in income to your attorney so they have a full understanding of your finances and make your trustee aware when necessary.

If you receive a lump sum of cash contact your attorney. – If you receive a lump sum of cash from an inheritance, a lawsuit or any other unexpected situation, you should let your attorney know immediately.  Your attorney will need to let your trustee know about this change.

You shouldn’t borrow money during the pendency of your plan – You aren’t supposed to borrow any money while you are working through a Chapter 13 plan.  Even if it is as little as $100, you are expected to get written permission from your trustee to do so.

Be Proactive – If you are having trouble or anything changes with your finances, be proactive and contact your attorney.  Your attorney can help you work through tough situations, especially if you’re having a difficult time fulfilling the requirements of your plan.

What happens if I can’t make my Chapter 13 plan payments?

The very first time you are having trouble making your Chapter 13 payment, you should let your attorney know.  If you are proactive and communicate with your attorney, he or she may be able to help you explore the other options available to you.

If you can’t make your payments, there are several other options you can consider, including:

Modification – If you can prove you are having a long-term financial hardship your attorney may be able to work with trustee to modify your payment amount.

Hardship Discharge – In some cases, if you are unable to make your Chapter 13 payments and you are eligible, you may petition the court for a hardship discharge.  With a hardship discharge, the court will generally discharge your case even if all your financial obligations have not been met.

Chapter 7 – If you are struggling to make your Chapter 13 payments, there is always the option to convert your case to a Chapter 7 bankruptcy in which we would work with you to file bankruptcy and have your debts wiped out without having to repay anything.

Refile – You should talk with your attorney first, but if you determine these options aren’t the right, you can also consider dismissing your current case and refiling as a means of renegotiating your terms.

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