What Happens If I Can't Pay My Chapter 13 Payments in Anaheim, CA?

First, contact a Bankruptcy Attorney in Anaheim, CA, if you run into trouble and need help making your Chapter 13 bankruptcy plan payments.

Contact the Chapter 13 trustee if you don’t have an attorney. Although there might be options, your case might be dismissed if you simply skip payments.

Payment Plans for Chapter 13 in California

The main component of a Chapter 13 bankruptcy case is monthly plan payments. According to the terms of the Chapter 13 plan, the Chapter 13 filer makes these payments to the trustee for distribution to creditors. A court order prevents creditors included in the plan from attempting to collect on past-due balances so long as plan payments are current and the petitioner complies with any other requirements.

Sometimes, the Chapter 13 plan lowers a loan’s interest rate or the principal. If the plan is successful, some unsecured debt may be discharged. Everything depends on timely payment. Many Chapter 13 cases fail because people filing for bankruptcy need to hire an experienced bankruptcy attorney in Anaheim, CA. To ensure you give yourself a fighting chance, call 800.400.9000 and speak to an attorney from Winterbotham Parham Teeple, a PC today.

Circumstances Change During Chapter 13

When you cannot make Chapter 13 plan payments, the possible solutions will depend on the cause of the disruption and how long it is expected to last. For example, you might be unable to continue making your plan payments for a month or two due to a medical condition that has kept you from working for several weeks. Other disruptions, such as job loss or disability, are more permanent.

Inability to Pay in the Short Term

If the problem is temporary, such as the above-mentioned medical issue, the solution may be as simple as deferring a few payments. Sometimes, the Chapter 13 trustee may suspend up to three plan payments.

Long-Term Changes Following Plan Confirmation

Many of the issues that cause a Chapter 13 filer to be unable to make plan payments are short-term, if temporary. Of course, abandoning payments for two or three months will not solve the problem. Some options in that situation are as follows:

Changing Your Chapter 13 Plan in Anaheim, CA

If your income changes or you incur an unavoidable expense, such as the need for ongoing medical care, but you can still make payments to the trustee, you may be able to change your Chapter 13 plan.

Modification options include surrendering the secured property to reduce plan payments, extending the repayment plan to reduce monthly installments, or decreasing the amount paid to unsecured creditors.

Switching To A Chapter 7 Case

If you qualify for Chapter 7, you can convert your case and discharge your unsecured debt. However, this solution will only work for some. If you filed Chapter 13 to manage secured debt or to protect non-exempt assets, a Chapter 7 case might not be appropriate.

Your bankruptcy attorney in Anaheim, CA, can advise whether you are eligible for Chapter 7 and the benefits and drawbacks of converting.

Having Your Chapter 13 Case Dismissed

You can simply dismiss your Chapter 13 case if modification isn’t feasible, you don’t qualify for Chapter 7, or you have another good reason not to convert. You no longer have the automatic stay’s protection if you dismiss a Chapter 13 case. Therefore, debtors can again expect calls from creditors, notices from debt collectors, and more severe actions like wage garnishment and lawsuits for debt collection.

Expert Bankruptcy Attorneys in Anaheim, CA

The best course of action for you will be determined by several variables, including the reason you are unable to pay, how long or short-term the change is expected to last, whether you have non-exempt assets, whether you rely on the Chapter 13 plan to keep your house or car, and other things. Ignoring the issue won’t make it go away. The sooner you discuss your options with your bankruptcy attorney from Winterbotham Parham Teeple, a PC, the better chance of coming up with a plan that works for you. Call us at 800.400.9000 today.