Financial problems have a way of hitting us when we are down. Most people who declare bankruptcy are hard workers who find themselves in tough financial situations. Filing for bankruptcy helps those individuals and families start anew on a stronger financial footing. Yet, what happens when a difficult financial situation arises while you are in the midst of Chapter 13 bankruptcy?
Unfortunately, bankruptcy does not shield you from unexpected debt such as debt caused by a medical emergency or car problems. Fortunately, there are ways to deal with those financial situations even while you are paying creditors through your 3- or 5-year Chapter 13 bankruptcy plan.
If you find yourself facing significant debt, contact your bankruptcy lawyer immediately. In a short-term emergency, you may be able to negotiate with your creditors and the bankruptcy trustee to extend your Chapter 13 plan or even waive certain payments.
If the emergency is a longer-term financial change (such as new medical bills or job loss), you may be able to modify your Chapter 13 plan through negotiations with your creditors. You will need to provide the court evidence of the change in circumstances as well as a proposed plan.
Depending on your unique situation, other options may include:
- Converting your Chapter 13 case to a Chapter 7 case
- Requesting a hardship discharge to end your Chapter 13 bankruptcy plan and discharge your debts
- Dismissing your Chapter 13 case in order to re-file in the future
Above all, it is important to let your bankruptcy lawyer know about the financial change. Your lawyer can help you find solutions that work for your financial situation and don’t put you back in debt.