16 Oct Living With Your Chapter 13 Plan
Chapter 13 Plans must be proposed to last a minimum of 36 months, and a maximum of 60 months. Three to five years is a long time!
And a lot can change during that time.
As plans are proposed and confirmed by the court based upon your set of circumstances at that time, it is possible that during the life of your Chapter 13 Plan, things might change, for better, or for worse. Often our clients are worried about changes like a decrease in income, a significant change to expenses, medical hardship, or a new financial challenge that comes up, such as the need for a new(er) car. All of these concerns go hand in hand with your responsibilities as a Chapter 13 debtor.
Below is a list of some guidelines for living with your Chapter 13 Plan.
Though you have an obligation to advise the Chapter 13 Trustee’s Office regarding changes, it is best to contact your attorney first, not the Trustee. Your attorney represents you, and can best present your circumstances to the Trustee.
- Make in-full and on-time payments to your Trustee. If you are having difficulty, and it looks to be a short term challenge–for example, you need to repair your car this month–contact your attorney to see if it is possible for you to make a smaller Chapter 13 Plan payment for that month. You will need to make the difference up later, but you will also be able to keep your car on the road.
- Make in-full and on-time payments to any secured lender, such as your mortgage company, or your car loan (unless your vehicle is being paid in the Plan). Remember, while you are in Chapter 13, you are obligated to make these payments in order to keep your property. If you run into difficulty, and get behind, your lender can ask the court to proceed with foreclosure or repossession of your property. While the Trustee may be reasonably patient if you are having a couple difficult months, your car or mortgage lender likely will not be so kind.
- You must report any significant and long-term change in income–up or down–to your attorney. It is best to meet and speak with your attorney regarding any changes. Your attorney can then present the information to the Trustee in a light most favorable to your case.
- If you are having difficulty, call your attorney. Sometimes when clients are having trouble, they are afraid and do not call their attorney until they have received a motion to dismiss their case. Instead, be proactive and contact your attorney to see what options you have. Depending on the circumstances of your new financial situation and your case, your attorney may be able to recommend an option to help you. The goal is to complete the Plan and receive your discharge. Do not jeopardize that discharge, and all of the hard work you have put into your Plan, because you are afraid.
- If you receive an inheritance, win a lawsuit, or come into any windfall of money, contact your attorney. You will need to advise the Chapter 13 Trustee, and again, it is best to do so through your attorney.
- Though you should not borrow any money during the pendency of your plan, if you absolutely have to, contact your attorney. To borrow even a few hundred dollars, you must obtain written permission from the Trustee. You can obtain this permission by speaking with your attorney, and evaluating your options. If it is determined that borrowing is your only option, your attorney can present your request to the Trustee in a light most favorable to your case.
Chapter 13 Plans are hard work, but with a great payoff: You repay a portion of your debt, become current on secured loans, and discharge most, if not all, of the debt that remains. Pay close attention to information you receive from your attorney and the Court, and be proactive as soon as a challenge arises, and you will be Chapter 13 success story.
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