When I discuss Chapter 13 plans with my clients I know that it is important to be realistic. After all, five years is a long time. You file your petition and receive a confirmation of your plan. Meanwhile, life continues with all of its ups and downs. Your car might break down, you may find yourself with medical bills you did not expect, you lose your job, or someone you love – a sick child, an elderly parent – needs your help. Suddenly not only the mortgage payment is daunting, but you cannot pay their monthly obligation to the Trustee.
Involve Your Attorney
The first thing you need to do is call your lawyer. The sooner your lawyer knows you are having trouble, the sooner measures to help can be put into place. Trustees in New Jersey are generally very accommodating. They are willing to work with debtors to help them stay in compliance with their plan. Often times, we reach an agreement with the Trustee that will allow the debtor to catch up on plan payments.
However, clients often don’t think to call their attorney when they have difficulty making their Chapter 13 plan payments. They just miss payment after payment on their plan. Inevitably, the US Trustee or some other creditor will file a Motion to Dismiss the case for missing payments. That is when the client usually calls for help.
Modify Your Plan
It’s OK. We can still help. If the client has the ability to make some payments, just not the payments that are required under their confirmed Chapter 13 plan, your attorney can file a Motion to Modify the Debtor’s Chapter 13 Plan. Your attorney will use the Motion to Modify to ask the Court to waive and cure any Trustee payments you missed, so you start fresh with the next payment, and resolves the Trustee’s motion to dismiss your case. Of course, the ability to do this varies from client to client and their own unique financial situation and plan. In addition, sometimes payments can be lowered, due to changes in the debtor’s financial situation after filing for bankruptcy protection or merely a reallocation of the monthly payment over time.
Convert Your Case
Finally, circumstances can change where it is impossible to keep up with your Chapter 13 plan. In this case, you may be able to convert your case from a Chapter 13 to a Chapter 7. But whether that is the right option for you will depend on the particulars of your case.
So, if you cannot stay current with your Chapter 13 plan payments, don’t get frustrated. Let your attorney know you are having financial trouble. Let your attorney help you decide how to handle your situation.