Chapter 13 And Unexpected Bills

24 Jun Chapter 13 And Unexpected Bills

What happens when you cannot make your Chapter 13 payments due to unexpected bills? A furnace goes, or a car breaks down, or you get sick or hurt. What then?

There are a number of options. None of them are “Keep this secret from your lawyer!”

You can ask for a suspension, or moratorium of payments and catch up by adding months to the end of your plan if your original plan was for less than 60 months, or you can increase the remaining payments if not. You can modify your plan to reduce the dividend to the unsecured creditors or to surrender a now-broken car. You can seek a Chapter 13 hardship discharge or you can convert to Chapter 7. Under the right circumstances, you can even ask permission to borrow additional money.

Each alternative has pros and cons which may or may not be appropriate for your situation. But there are options.

Do not keep your struggles a secret from your lawyer. There will be a motion to dismiss or motion for relief from stay (to begin foreclosure) soon enough, making the challenge more difficult for your attorney than if you had said something when the troubles began.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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