As discussed in previous posts, Chapter 13 bankruptcy may give you and other Eugene residents a chance to pay back most or all of your debt in a way that is manageable. The three- to five-year repayment plan that is approved by the bankruptcy court is designed to be affordable for those under Chapter 13, based on the ability to pay. However, at (The Law Office of Kim Covington, we understand that life is not always reliable, and you might find yourself in a situation where it is no longer possible to make your Chapter 13 payments.
In this case, you might consider filing for a hardship discharge. If approved, most or all of your dischargeable debts would be erased. You would need to meet several requirements to qualify for a hardship discharge, states the Administrative Office of the U.S. Courts. First, you must prove that the reason for your current hardship is out of your control and not a temporary situation. For example, you might have been involved in a car accident that has left you permanently unable to work. Second, you must have already paid your creditors the minimum amount of what they might have received if you had a Chapter 7 bankruptcy. Third, you must be able to show that modifying your bankruptcy to fit your current situation is not possible or practical – if you cannot pay your debts due to a permanent disability, there would not be much point in modifying your repayment plan.
You may learn more about your debt reorganization options by visiting our page on Chapter 13 bankruptcy.