Defaulting on a Chapter 13 bankruptcy can be a very serious matter. You may have options, but it is vital that you work with your College Station bankruptcy attorneys if you find yourself in this situation.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a restructuring of debt plan, and you are expected to make payments to the bankruptcy trustee for from three to five years. Chapter 13 is generally the option for individuals whose income is too high to qualify for a Chapter 7 total liquidation. In exchange for the payments you make, your creditors are prevented from making collections efforts.
If you default on your payments, you may not be in serious trouble if you can catch up in a short amount of time. The bankruptcy trustee, however, does not have any authority to grant you a chance to miss payments. Therefore, if you are laid off from your job or need to take unpaid time off for a health problem, you may wind up in trouble. In essence, the bankruptcy court could dismiss your Chapter 13 bankruptcy, leaving you in the position you were in before you filed originally. Your creditors will then have the legal right to resume collection efforts, and this can include repossession of your car and foreclosure proceedings on your home.
Options if You Cannot Continue to Pay on a Chapter 13
You do have certain options if you find yourself unable to continue to make payments on your Chapter 13 bankruptcy. If you fall behind for a few months but then are able to make a lump sum payment that catches you up, then your Chapter 13 may continue. You need in such case to then continue to make regular payments to the bankruptcy trustee.
Another option you have is to file a motion with the bankruptcy court asking that your payments be suspended for a period of time due to a lay off or other serious financial crisis. However, if you are not certain that you can find another job within a reasonable amount of time, this option may not be viable.
You may also file for a Chapter 7 bankruptcy based on your new lower financial situation. This may allow you to liquidate your debts rather than make payments on them. You may have to give up certain assets to the bankruptcy court in this option, however.
We May Be Able to Help You
If you find yourself in danger of defaulting on a Chapter 13 bankruptcy, it is very important that you contact your College Station bankruptcy attorneys. We may be able to help you find an option that can prevent you from dismissal of your Chapter 13. Call Peterson Law Group today at 979-703-7014 or 936-337-4681.