Chapter 13 bankruptcy is a lengthy process that typically requires multiple years to complete. Individuals typically need to make between three and five years of payments after negotiating a repayment plan.
In some cases, people experience sudden financial complications during a Chapter 13 bankruptcy case. The loss of a job, for example, could make continued payments impossible for the filer to afford. Do people generally face the dismissal of a pending bankruptcy if they lose their job and cannot complete their repayment plan?
There are options after a job loss
A Chapter 13 filer has two possible solutions other than case dismissal. In some cases, they can file paperwork requesting a modification of their payment plan. After review of their change in income at a new hearing with the court-appointed trustee and representatives from affected creditors, they may be able to reduce their payments to make them affordable.
The other option is to convert the case to a Chapter 7 bankruptcy. If a job loss results in an individual struggling to find new employment or accepting a new job with lower wages, they may be eligible for a Chapter 7 bankruptcy. The best solution depends on the filer’s circumstances, as well as the property that they may worry about exempting in a Chapter 7 bankruptcy.
Sitting down with a bankruptcy attorney can be a smart choice for those facing complications during a Chapter 13 bankruptcy filing. Job loss can make it challenging for filers to fulfill their repayment plan, making a new strategy necessary if they hope to complete their bankruptcy and secure a discharge.