I Lost My Job and Cannot Make My Chapter 13 Payment

by Andy Miofsky, Esq.

April 5, 2009

Illinois Bankruptcy Lawyer Andy Miofsky says, “A lack of income will be fatal to most chapter 13 cases.  If you are unable to fund your existing plan, that plan will no longer work.  You have six basic choices, some of which might offer assistance, while others will not solve the problem.”

First, you can ask the court to temporarily suspend your payments for a few months while you try to increase your income.  This option may draw an objection from mortgage and car claimants who demand to be paid on a monthly basis and could result in those creditors seeking to recover their collateral.

Second, you can amend your plan to extend the duration to 60 months.  This gives you a longer time to pay the required amount into your case, thus lowering the monthly payment.  You still are required to make monthly payments, just at a lower rate.

If that does not provide enough relief, third, you should consider surrendering assets that you can no longer afford to keep.  Remember, if you were not in the bankruptcy those creditors would try to foreclose or repossess the assets.  If you cannot afford to pay for something while in bankruptcy, you are certainly unable to afford to pay for it outside of bankruptcy.

Fourth, if unpaid assets are not an issue, and if you have been in the case long enough, you might be eligible for a hardship discharge without having to finish the rest of your case.

Fifth, remember, you are in chapter 13 because you asked to be.  You can voluntarily move to dismiss your chapter 13 case at any time and you can try to deal with your creditors on your own.

Finally, you can take no action, and the Court will eventually dismiss your case for lack of payment, giving you a chance to refile a new case in the future when your finances improve.

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Andy Miofsky, Esq.

Andy Miofsky is an Illinois consumer rights lawyer with offices in Granite City Illinois and Mount Vernon. Andy represents people with bankruptcy and student loan debt problems throughout the Central and the Southern District of Illinois since 1979.

Last modified: January 12, 2012