We have pointed out numerous times in this blog the factors that are used in determining eligibility for a Chapter 13 bankruptcy. To recap, Chapter 13 is known as the “repayment bankruptcy,” which may allow you to protect certain assets while repaying most or all of your debt in a manageable way. To qualify for Chapter 13, you need to meet certain income requirements. An ability to make regular payments is essential for Eugene residents to qualify for this type of bankruptcy. However, what if your situation changes and you are no longer able to make your payments as outlined in your bankruptcy agreement?
Cornell University Law School’s Legal Information Institute points out that, in some circumstances, you might be able to request a modification for your Chapter 13 bankruptcy plan. For example, you may find yourself temporarily unemployed or facing a pay cut. You might request to reduce your monthly payment amount, which could allow you to continue meeting your obligations. If you are unable to make your payments, your bankruptcy case might be dismissed, which could result in further hardship. To avoid this problem, you might be eligible to switch to a Chapter 7 liquidation bankruptcy.
Bankruptcy courts take into account that anyone’s financial or employment situation can change without notice. Fortunately, your bankruptcy agreement is not set in stone. It is important to speak with your Chapter 13 trustee or the bankruptcy court as soon as possible when your situation changes, to avoid being penalized. The information in this blog should not replace the advice of a lawyer.