Chapter 13 Bankruptcy: 3 Situations When You Can Modify Your Repayment Plan After Confirmation
Under chapter 13 bankruptcy, you are allowed to keep your assets, as long as you come up with a feasible and practical repayment that can be completed from anywhere between 3 to 5 years. There's usually little wiggle room with the repayment plan, and you won't be left with a lot of disposable income. Due to this reason, even minor changes to your financial situation can cause you to experience significant hardships in making payments to your repayment plan. In some situations, you can file a motion with the bankruptcy court in hopes of being able to modify your repayment plan after it has already been confirmed. Here are 3 situations when this is possible, and the type of evidence that you'll need.
Loss of Employment
If you get laid off, then there's a huge chance that you will no longer be able to make payments to your plan. In these situations, instead of modifying the terms or the conditions of the plan, the court might want to grant you some leniency and give you a short break in the form of a moratorium until you have things sorted out. The moratorium is typically limited to 90 days. During this time, you'll be expected to seek employment capable of providing with you a similar income. To make your case, you'll need to file your motion with a letter from your employer detailing the fact that you have just lost your job.
Pay Cut or a Reduction in Other Income
With money being so tight when dealing with a chapter 13 repayment plan, you might not be able to afford any pay cuts at work or any other type of reduction in any other lines of income. Even the smallest reduction might make it difficult to pay certain bills. With that said, a paystub documenting your reduction in income can be filed with your motion. Based on your new financial situation, different repayment terms may need to be negotiated with creditors. Naturally, the court will allow your creditors to file an appeal should they disagree with your new terms.
Illness or Disability
Falling ill or dealing with an accident can significantly impact your ability to pay. This is particularly true if you are no longer able to work as much. In these situations, medical reports and documents, along with testimony from a medical professional, can go a long way in your motion. The court will need to determine whether your situation is temporary or permanent. In the event that it is temporary, they will determine whether giving you a break or changing the terms of your repayment plan will be best. In the event that it is permanent, they might recommend that you switch and file for bankruptcy under chapter 7.
Bankruptcy courts acknowledge that even the most minor changes in your financial situation can cause extreme hardships in your ability to pay off your repayment plan. Once you file a motion, a hearing will be scheduled in front of a judge so that you can plead your case. For more information, contact companies like http://www.tblakelaw.com.