Sometimes after you get all settled into your Chapter 13 bankruptcy case, LIFE HAPPENS! Your Chapter 13 plan has been confirmed and you are going along making your monthly plan payments to the Chapter 13 trustee as well as your mortgage payments and car payments. Sometimes life happens for the better and sometimes for the worse. You might be experience a loss of income due to job termination, death, sickness or injury, or separation, all of which can really disrupt the progress of your Chapter 13 case.
Suddenly you don’t have the money to buy gasoline for your car much less for making your Chapter 13 Plan payment. You no longer have that disposable monthly income you had when you filed your case to pay to your general unsecured creditors. If you don’t make your plan payment for a few months, suddenly you are faced with a motion to dismiss your case filed by the Chapter 13 Trustee.
All may not be lost as you may be eligible for a “hardship discharge” under 11 U.S.C. Section 1328(b) even though you have not made all of your payments under the plan. There are a few considerations as listed below:
- Court generally will only grant a hardship discharge when the inability to pay is due to circumstances beyond the debtor’s control and through no fault of the debtor.
- A hardship discharge will not be granted if you are able to resolve the issue by modifying the plan.
- Your general unsecured creditors still have to receive at least as much they would have received had you filed a Chapter 7 bankruptcy case. So, if at the time you filed your Chapter 13 you had non-exempt equity in an asset, for example – you had equity in your home that exceeded the amount that you we permitted to exempt (learn more about exemptions here and here), you may not meet this requirement.
If you think your situation might qualify for you to receive a hardship discharge, consult with your bankruptcy lawyer to discuss the possibility. If your lawyer thinks you have a chance, the next step would be to file a motion with the court. Expect to attend a hearing and testify as to your situation.
If it doesn’t seem like you qualify for a hardship discharge, then you may be able to convert your case to a Chapter 7 case, or you could let your Chapter 13 case be dismissed and refile a new Chapter 13.
If you are in the Philadelphia area and looking for an experienced and compassionate bankruptcy lawyer to help you find out your options, please contact the attorneys at Coleman & Kempinski P.C., Kim Coleman and Ray Kempinski, for a FREE CONSULTATION.
Photo Credit: Beast of Traal
Other attorneys who are blogging the Bankruptcy Alphabet believe H is for:
- Harassment by Creditors – Christopher McAvoy (Downriver, MI)
- Harassment by Creditors – Pittsburgh Bankruptcy Attorney Shawn Wright
- Hearing – Ryan D. Caldwell (Omaha & Lincoln, NE)
- Hearings – Elizabeth Johnson (Birmingham, AL)
- Hijacking – Christine A. Wilton, Lakewood, Ca Bankruptcy Lawyer
- Home Is Where The Heart Is – Jeena Cho (San Francisco, CA)
- Home: Can the Trustee Take It? – Jacksonville Bankruptcy Attorney J. Dinkins G. Grange, Esquire
- Homeowner’s Association Dues – Catherine Eranthe (Marin County, CA)
- Homestead – Bob Doig (Colorado Springs, CO)
- Honest but Unfortunate Debtor – Bret Nason (Wisconsin)
- Honesty – Bill Balena (Cleveland Area, OH)
- Honesty (and Fraud Avoidance) – Chris Carr (Philadelphia, PA)
- House – Cathy Moran (Northern CA)
- House – Mark Markus (Los Angeles, CA)
- Household – Jay S. Fleischman (New York, NY)
- Household – Mitchell Goldstein (Metro Richmond, VA)
- Household Median Income – Peter Behrmann (Livonia, MI)
- Household Size – Stuart Ing (Hilo, HI)
- How Much Is Your House Worth? – Kurt O’Keefe (St. Clair Shores, MI)
- Save My House – Houston Bankruptcy Attorneys, Busby & Associates