What Happens After I File a Chapter 13 Bankruptcy Plan, Part 2
Last time, I talked a little about the chapter 13 bankruptcy process, from filing your case to getting your repayment plan approved – or “confirmed” – by the bankruptcy court. This part of your chapter 13 case is very important, and sometimes it’s the most – or only – challenging part of your case. Of course, even after your plan is confirmed you’ll still need to make payments to the trustee for 3 – 5 years, which can be very challenging! There may also be other issues that come up in your case, either related to your mortgage, car payments, or changes in income and expenses. Let’s take a look at some of these more closely.
Over the last few years, Colorado bankruptcy judges have decided that, with few exceptions, if you’re keeing your home you must pay all mortgage payments which come due during your case, or your case could be dismissed because the mortgage payments are required to be paid “under the plan.” This can create real problems for folks who are stretching to make ends meet while also paying their bankruptcy trustee. Fortunately, for those who are struggling, but who also have a competent chapter 13 bankruptcy lawyer, a few missed payments don’t usually cause a problem so long as the borrower can get caught up during their bankruptcy case. An attorney may be able to help you by either modifying the terms of your bankruptcy plan to catch up the missed payments, by helping you work out a catch-up agreement if you just went through a short rough patch, or with some other strategy for fixing the issue.
The same can be true with vehicles – if your plan says your going to pay for your vehicle, then you need to either do that or you need to turn in the car and modify your repayment plan so you’re no longer required to pay for it. The important thing in either situation is to call your attorney if you ever fall behind on your mortgage or auto loan.
Or maybe you’ve lost hours at work, or had to take a pay cut, and you can no longer afford your monthly payment. In many situations, your attorney can help you reduce your bankruptcy payment, or if necessary and can convert your case to chapter 7, or request that your chapter 13 be ended early with a “hardship discharge.” In our firm, we’ve used all three options for our clients on hundreds of occasions.
So to recap: chapter 13 can be hard, but if you’re ever struggling to afford your vehicle, home, or any other living expense, or if you’ve fallen behind on your bankruptcy payments, then you still probably have options for getting your case back on track. But call your attorney! And if he or she isn’t being responsive or helpful, consider hiring a new attorney to help you successfully complete your case.