I filed for bankruptcy and subsequently was laid off after the filing. I cannot make the bankruptcy payments. What happens?
Chicago, IL |
I filed for bankruptcy and received my monthly payments on 9/16. I was laid off on 8/16. My attorney advised me not to inform the court I was laid off. I still have not found work and cannot make the court payments. What can I do?
It is very hard to adjust chapter 13 payments, though if your income disappeared that seems like a valid reason to modify the plan. The length of your payment plan depends on your income level. If your "current monthly income" (your average income over the six months prior to filing) exceeds the median monthly income for a household of your size in your state, your plan must last five years. If your income is less than the median, you can propose a three-year plan, even if your unsecured creditors cannot be fully repaid during that time. To find the median income figures for your state, go to the United States Trustee's website. I would also attempt to find the lawyer first ,if you can’t get a hold of them call the Trustee's office and inform them that you have a temporary problem making the next payment. The Trustee should then direct you back to your lawyer to file a motion to miss a payment or two. Then your lawyer needs to decide whether to Convert or file for a "hardship" discharge. You generally have at least 30-60 days before the Trustee will file a motion to dismiss. And even then, you have 45 days to take corrective action (modified Plan or catching up payments).