Inability to Follow the Chapter 13 Monthly Payment Plan

  • Bankruptcy Chapter 13

Inability to Follow the Chapter 13 Monthly Payment Plan

It is very difficult to decide whether to file for a Chapter 13 bankruptcy or not. The main reason it is a difficult decision to make is that it might come with a lot of limitations.

In Chapter 13 bankruptcy, your lawyer and your bankruptcy trustee (appointed by your court) make a feasible repayment plan, in which you are supposed to make monthly payments to the trustee for 3 to 5 years. At first, it might sound convenient for you, but later, you come to know more.

Your household size, household income, and debts decide your Chapter 13 plan. Your payments and all your disposable income must also be equal till the time you have not paid back your complete debt. This means that the money left after paying all the allowed necessary monthly expenses (decided by the average household expenses of the household of the same size in your area) should be handed over to your bankruptcy trustee every month.

All this might make you hesitate and raise a lot of questions in your mind. I will have to give away all of my disposable income! What all will be deemed as necessary and allowed expenses? What will I do with sudden unexpected expenses? What if I or my spouse has to be suddenly hospitalized? The car needs a new engine or will soon need new tires, etc. Many such questions start troubling your mind. Since all of your disposable income will be turned over to your bankruptcy trustee every month, you might fall behind on your Chapter 13 payment plan in case an unexpected emergency expense arises.

However, it is not necessary that unexpected expenses will make you fall behind on your Chapter 13 payment plan. Normally, you will be given a specific period of time to catch up with your payments because:

  1. Falling behind on monthly payments might make your trustee file a Motion for the dismissal of your Chapter 13 bankruptcy because of lack of payments.
  2. In most of the cases, the Judge might refuse the filing of this motion and ask you to catch up with your payments in a specific time period.
  3. The Judge might dismiss the Chapter 13 bankruptcy, if you are unable to catch up with your payments within the set time period.
  4. In case of dismissal of your Chapter 13 bankruptcy, you will have the option of filing a Motion to Vacate the dismissal within 14 days from the date of dismissal.
  5. A hearing will then be set for the Motion to Vacate.
  6. You might then be granted another 60 days to catch up with your Chapter 13 payment plan, at the hearing.

In brief, Chapter 13 bankruptcy does put some limitations on your unexpected expenses and monthly incomes, but it can still be successful and you can walk away debt-free at the end. You can contact the Recovery Law Group or 888-297-6203, to consult more about a Chapter 13 bankruptcy filing.


2019-10-30T10:49:19+00:00