Call Now!
Call Us 414-326-9231 608-260-7133 Text Us 414-326-4709

Chapter 13 modifications: Take stock of your options carefully

What happens when you can't continue making the payments for your Chapter 13 bankruptcy?

You essentially have two choices if you want to continue to stay within the protection of the bankruptcy court: Convert to a Chapter 7 bankruptcy or ask the court to modify your Chapter 13 plan and lower your monthly payment.

In order to modify your existing plan, you generally have to show the court that there's been a change in your circumstances since you last contacted the court that is affecting you financially. For example, things like losing your job, having a new baby or having a family member with a severe illness could all be things that make it impossible to keep up with your plan.

You then have to decide exactly how you want to modify the plan. One option is to ask the court to simply lower your payments. Before you do that, take a careful look at what exactly is being paid through your plan, at what rate, in order to determine if your request is even possible.

If you're paying more than the bare minimum (1 percent) back on any unsecured credit card debt or person loans, you probably have some leeway to lower the amount. On the other hand, if your loan consists of mostly mortgage and car payment arrears, you may not be able to reduce your payment without putting your home or car at risk of foreclosure.

Another option is to ask the court to extend your Chapter 13 to give you more time to pay it off. If you were set to pay off everything in three years, the court may be willing to give you five years to repay instead.

If you don't have any wiggle room to simply lower your payments and you can't extend them, you may have to consider converting to a Chapter 7 bankruptcy instead. While that may mean giving up some of the property you had hoped to keep, it could be your only option if you can't make the payments anyhow.

Knowing what to do when you're faced with a financial crisis that just seems to be compounded is difficult without advice. Consider talking to an attorney about the problems you're facing in order to get detailed answers that are tailored to your situation.

Source: Bankrate, "4 limit on modifying bankruptcy," accessed March 10, 2017

No Comments

Leave a comment
Comment Information
Email Us For A Response

Free Case Evaluation

* indicates required field

Miller & Miller Law, LLC
  • VISA
  • Master Cards
  • Discover
Milwaukee Office map Madison Office map Kenosha Office map

633 W Wisconsin Ave, Suite 500
Milwaukee, WI 53203

Phone: 414-312-6581
Fax: 414-277-1303
Milwaukee Office

2810 Crossroads Drive
Suite 4001
Madison, WI 53718

Phone: 608-260-7133
Madison Office

6123 Green Bay Road
Suite 210
Kenosha, WI 53142

Phone: 262-326-1669
Kenosha Office

Appleton Office
4321 W. College Ave.
Suite 200
Appleton, WI 54914

Phone: 920-280-3838
Appleton Office

Brookfield Office
200 S. Executive Drive
Suite 101
Brookfield, WI 53005

Phone: 262-261-0665
Brookfield Office

Glendale Office
6333 N. Green Bay Avenue
Glendale, WI 53209

Phone: 414-973-8662
Glendale Office

Fax: 414-277-1303 - We also have offices in Appleton, Glendale and Brookfield to better serve you.