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What If I Can’t Fulfill the Repayment Plan Under Chapter 13?

The Law Offices of David K. Blazek, P.C.  Jan. 6, 2023

Chapter 13 text on Document form and Gavel isolated on office desk.When going through financial distress, you may be able to seek debt relief by filing for protection under Chapter 13 bankruptcy. In Georgia, the consumer filing for Chapter 13 must propose a feasible repayment plan – spread between 3 and 5 years – to pay back their debts using their potential earnings. 

However, if you’re struggling with fulfilling the repayment plan under Chapter 13, you may be eligible to seek a modification, petition for a hardship discharge, convert your case to Chapter 7, and dismiss your case and refile. A seasoned Georgia bankruptcy attorney can inform you about what to do when struggling with payments under Chapter 13 bankruptcy. 

The Law Offices of David K. Blazek, P.C. enjoys providing comprehensive guidance and advocacy to clients in bankruptcy-related matters. Attorney David Blazek can inform you about your possible legal options to achieve debt relief when you can’t fulfill the repayment plan under Chapter 13. The firm proudly serves clients across Tampa, Miami, Jacksonville, and Orlando, Florida, as well as throughout Atlanta, Columbus, and Macon, Georgia. 

What Should I Do If I Know I’ll Miss a Payment?  

Many consumers facing financial hardship usually enter into a Chapter 13 repayment plan with the intent to settle their debts using their future income. Unfortunately, life’s curveballs can strike unexpectedly. If you know you’ll miss a payment under Chapter 13, you should notify your attorney or the court-appointed trustee immediately. In case it is only one payment, your Chapter 13 trustee may cover for you or help you seek a suspension of payments from the bankruptcy court. 

Options When You Can’t Fulfill Your Repayment Plan  

However, if you would find it impossible or extremely difficult to fulfill your repayment plan under Chapter 13, here are some available options to seek relief: 

Chapter 13 Repayment Plan Modification 

Modifying a Chapter 13 repayment plan allows a consumer to adjust the agreed-upon monthly payments under the plan for a reduced amount. In Georgia, you may be able to change a Chapter 13 repayment plan before or after the plan has been confirmed. 

Modification Before the Plan Is Confirmed – If your financial condition changes before your Chapter 13 repayment plan is confirmed, you can reach out to your creditors and the court explaining your predicament. Also, you can propose a modified plan for the trustee and your creditors to evaluate. The court will approve the new modifications once every party is satisfied. 

Modification After the Plan Is Confirmed – Conversely, if your Chapter 13 repayment plan has been approved, you must petition a motion seeking the court to change the plan payments to an affordable amount. Also, you will have to attend a court hearing to explain your reasons for asking for a modification to the trustee and court. You may also be required to show evidence that indicates material changes in circumstance before your request can be approved. 

Hardship Discharge 

However, if you’re unable to complete your repayment plan or propose a modified plan, you may seek a hardship discharge. A hardship discharge will wipe out some debts and release your obligation to complete your repayment plan. To get a hardship discharge, the following factors must exist: 

  • You’re unable to complete your repayment plan due to circumstances beyond your control. 

  • Your unsecured creditors have received an adequate amount as they would have under Chapter 7. 

  • You’re unable to modify your Chapter 13 repayment plan. 

Additionally, if your motion for a hardship discharge is approved, only unsecured nonpriority debts will be discharged. These include credit card debts, medical bills, utility balances, business debts, attorney fees, civil court judgments, past-due rents, and personal loans. 

Convert to Chapter 7 

Furthermore, consumers who do not qualify for hardship discharge may be able to convert their Chapter 13 case to Chapter 7 and receive a discharge. Once you convert your case to Chapter 7, the court-appointed trustee will gather and sell your nonexempt assets. The trustee would then pay some or all of your creditors using the net proceeds from the sale. Your general unsecured debts would be wiped out, and you will receive a bankruptcy discharge at the end of your Chapter 7 case. 

Dismiss the Case and Refile 

Lastly, you can file a petition to have your Chapter 13 case dismissed. Once dismissed, you will return to your previous situation before filing for bankruptcy. Unfortunately, the automatic stay order will be removed, and your creditors will be able to file claims, seize your property, collect money, or take legal action against you. 

Rely on Experienced Representation  

Fulfilling the repayment plan under Chapter 13 bankruptcy can be quite difficult. If you are struggling with making payments, you may need to consider your available option to save your bankruptcy and get a discharge. Attorney David Blazek has the diligence and expertise to advise and guide individuals who are unable to make payments under Chapter 13. 

As your legal team, David can educate you about the benefits and drawbacks of each legal option and help determine the right choice for your unique situation. Whether you are seeking modification, hardship discharge, want to convert to Chapter 7, or dismiss your case and refile, Attorney David Blazek can direct you through the legal processes involved and help you navigate crucial decisions. 

Are you struggling to make payments under your Chapter 13 bankruptcy repayment plan? Contact The Law Offices of David K. Blazek, P.C. today to arrange a simple consultation with a trusted bankruptcy attorney. The firm is proud to serve clients across Tampa, Miami, Jacksonville, and Orlando, Florida, as well as throughout Atlanta, Columbus, and Macon, Georgia.