Can You Put An End To Your Chapter 13 Reorganization Plan?
by Veeti Lepisto
If you have had to declare bankruptcy, there are two main types of consumer bankruptcy codes that govern the procedures. Chapter 7 bankruptcy filers have most or all of their debts forgiven but stand a chance of losing property. For various reasons, some filers are drawn to filing a chapter 13 bankruptcy instead. While all legal procedures can be difficult to stop once started, chapter 13 reorganization plans can be halted in most cases. Read on to find out why this might be needed and how to accomplish it.
What to Know About Chapter 13 Bankruptcy Plans
Consumers that need or want to use a chapter 13 have good reasons for doing so. The differences of a chapter 13 bankruptcy over a chapter 7 bankruptcy are:
1. Filers with high incomes might not be able to file for a chapter 7 bankruptcy, but income is irrelevant with a chapter 13 filing
2. Filers who feel responsible for paying their debts, at least in part, may feel that a chapter 13 allows them to have less on their conscious than the total debt forgiveness of a chapter 7.
3. Chapter 13 filers may be viewed as more financially responsible than chapter 7 filers and may have an easier time rebuilding their credit.
Chapter 13 plans allow consumers to stretch out their debt payments and have penalties, late fees, and interest adjusted or forgiven. The plan goes on for several years and at its end, any remaining debt is forgiven.
When Problems Arise With Your Repayment Plan
The most common issue usually involves being unable to comply with the repayment plan. Even when the payments are reduced, some filers are in such severe financial straits that they cannot afford to comply with the agreement. Even if the plan seemed doable at first, issues like unexpected medical bills and tax debts can pop up and wreak havoc with a budget. Speak to your bankruptcy lawyer about modifying the plan already in place before you request a dismissal.
When You Request a Chapter 13 Dismissal
If you cannot modify a chapter 13 to your satisfaction, you can send a letter to your bankruptcy trustee using certified mail. You simply need to state that you want the case dismissed – you don't have to provide the trustee with a reason. You should understand, however, that once the case is dismissed you will automatically become responsible for all debts under the plan.
Your next move might be to file a chapter 7 bankruptcy. If so, speak to your attorney about any waiting periods imposed and take action as soon as you can legally do so.
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About Me
Several years ago, one of my best friends married the guy of her dreams. This tall, quiet man adored my friend. Almost every week during their courtship, he presented her with a beautiful, fragrant arrangement of flowers. At the time, my friend’s mom joked that her home resembled a funeral home because of all of the flowers her boyfriend sent her. After the happy pair married, they purchased a new home together and quickly began running out of money, meaning that he could no longer afford to give her the flowers she loved. They even discovered they couldn’t afford to pay the monthly mortgage. After only a few years of marriage, they filed for bankruptcy. On this blog, you will discover the ways a reputable bankruptcy attorney can help you successfully recover from financial ruin.