A Chapter 13 bankruptcy is a court approved payment plan whereby you pay back a portion (or all) of your debt. People who make above median income for their household size are generally ineligible for Chapter 7 bankruptcy, making Chapter 13 their only option. Chapter 13 can also be the best option if you have a lot of equity in your home, as a Chapter 13 doesn’t entail liquidation of any assets. After you file a Chapter 13 bankruptcy, it is important to stay current on your bankruptcy payments. Failure to stay current on your payment plan can result in dismissal.
But what if you can’t afford your plan payments? First off, the court crunched the numbers on your income, expenses, and debt level to be sure you can afford your payment plan, so don’t think you can’t make your payments just because it’s hard to do so. With that being said, sometimes life events can throw a monkey wrench in your plan, preventing you from making your payments. You can modify your payment plan with the court if you have a substantial drop in income or an unavoidable increase in expenses. If you your income has dropped enough, the other option is to convert to a Chapter 7 bankruptcy.
Feel free to give us a call if you are interested in looking into bankruptcy. We’re one of the top bankruptcy firms in the Auburn area, and would be happy to assist you with your Auburn bankruptcy.
Categorized in: Chapter 13