Get out of chapter 13 payment plan?

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Question:

My income has been reduced due to an illness. Can I get out of my chapter 13 payments?

Answer:

It is possible to get out of your chapter 13 payments if your circumstances have changed. You should do following things in this situation:

  • If you have legal representation, contact your lawyer to determine if your chapter 13 plans can be restructured to make it affordable.
  • If you do not have a lawyer, contact the trustee office directly and explain how your situation has changed.
  • If it is possible to maintain the Chapter 13 on your reduced income, a motion to modify the plan will need to be filed.
  • If your chapter 13 plan is no longer viable, you could request a hardship discharge under the chapter 13 or you could file a motion to convert your chapter 13 to a chapter 7 and receive your discharge in that manner.

Hardship Discharge

A hardship discharge is allowed in a chapter 13 bankruptcy in the following instances:

  • Your inability to complete the plan is due to circumstances beyond your control and through no fault of your own.
  • Creditors have received at least as much as they would have under a chapter 7 liquidation.
  • Modification of the plan is not possible.

A hardship discharge is more limited than a general discharge under chapter 13 or a chapter 7. Bankruptcy is complex. You should consult with counsel experienced in personal bankruptcy to get advice as to which of these methods will help you accomplish your goals.

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