Technically, if you fail to continue with your Chapter 13 payment plan, the bankruptcy trustee or the creditor will certainly request the court to dismiss your bankruptcy filing. However, you are still left with many alternatives to save your bankruptcy case and obtain a discharge. Read on to know the alternatives you may have:
1. Get current on your payments
As per latest trends, most of the Chapter 13 filers fall down in middle of their repayments periods due to temporary financial emergency. And once the emergency is resolved, most filers can catch up if provided with sufficient time. If you are facing similar obstacles and your bankruptcy filing is on the verge of dismissal, you can explain your circumstances to court and request more time so that you can seize with your repayment plan once again. Most of the bankruptcy courts will allow to more time or offer you a certain catch up plan so that you don’t default on the payment plan.
2. Modify your Chapter 13 payment plan
If your financial emergency is not supposed to resolve within a short tenure (for instance, you lost your employment), you can even request the court to modify your payment plan and reduce the monthly payments. However, if you want to modify your payment plan, you need to propose the court a revised payment plan and one that you can afford along with attached papers establishing your inhospitable circumstances and details of your new budget.
3. Request a hardship discharge
If it has just become impossible to continue with your Chapter 13 bankruptcy plan, you may be eligible to receive a hardship discharge. A hardship discharge may act as a boon as in this discharge all your due payments are obliterated. However, this is possible if the court concludes that the decision can serve the interest of all the parties involved in the best possible way. Again, just receiving a hardship discharge doesn’t necessarily erase all the priority debts like certain taxes or domestic support obligations (like child support and alimony).
4. Convert to Chapter 7
There is another way out – convert your Chapter 13 to a Chapter 7 and receive a quick discharge! If you propose to convert, you’ll be provided with a new trustee and you need to prove that you qualify for Chapter 7 bankruptcy since your current financial circumstances do not allow you to afford a Chapter 13 repayment plan. However, just like hardship discharge, you cannot get rid of your priority debts by filing Chapter 7 bankruptcy.
5. Dismiss your existing filing and refile
If none of the alternatives work for you, you can always let your case get dismissed and refile another Chapter 13 bankruptcy petition. You can even file for Chapter 7 since you have already dismissed the previous petition and are most likely to qualify for Chapter 7 bankruptcy.
