18 Feb Chapter 13 Bankruptcy: What Happens If I Cannot Complete My Chapter 13 Plan (Part Three)
Your Chapter 13 bankruptcy cannot be modified or converted! Sowhat happens when you can neither modify your Chapter 13 plan, nor are you eligible to convert a Chapter 13 bankruptcy into a Chapter 7 bankruptcy?
Another option you can consider is seeking a Hardship Discharge.
A Hardship Discharge can be sought at anytime after the Chapter 13 Plan has been confirmed by the Bankruptcy Court.
In order to qualify for a Hardship Discharge the following criteria must be met:
1) The circumstances leading up to the request for a Hardship Discharge must be beyond the control of the debtor. Some examples would be:
a) An unexpected loss of income. The loss of income will generally have to be more than just a temporary loss although it is not necessary to show that the debtor has no hope of finding employment.
b) A health problem that will in all likelihood prevent the debtor from returning to any type of gainful employment.
Often the age of the debtor will come into play in determining whether loss of income, or to a lessor degree, health problems will be of such a degree to justify the hardship discharge.
2) The unsecured creditors have received as much as they would have received in a Chapter 7 bankruptcy. Remember, unsecured creditors get paid in priority to unsecured debts, so this is an issue of whether the debtor had any assets that were non-exempt based upon the liquidation analysis that was performed at the commencement of the 13.
3) It is not feasible to modify the plan. Usually, a Motion for a Hardship Discharge follows an attempt to modify a Plan to make it work. A modification might include paying less to unsecured creditors, suspending payments for a period of month, or increasing monthly payments for the remainder of the bankruptcy.
For modifications involving suspending payments or paying more to work, the debtor must show that they have time left for their Plan or that they have money available to fund a higher monthly payment.
Consult an experienced bankruptcy attorney when making decisions about changes to your bankruptcy.
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