Overcoming Personal and Legal Challenges

Overcoming Personal and Legal Challenges

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Is it possible to put a hold on Chapter 13 payments?

Chapter 13 bankruptcy attempts to provide a solution for both the debtor and the creditors. An Alabama resident who seeks bankruptcy protection under this chapter must follow a repayment plan to creditors. The debtor must make timely payments for the established terms. Failing to make payments could lead to the bankruptcy case facing a dismissal. Some may wonder if putting a temporary pause on payments remains an option if cash flow troubles arise.

Pausing payments in Chapter 13 bankruptcy

When filing for Chapter 13, the debtor submits a payment plan to the court. The payment plan covers any remaining debts neither paid nor discharged. The debtors usually have three or five years to complete the payment arrangement, and the trustee overseeing the bankruptcy keeps track of those payments.

Anyone who wishes to pause payments could file a “motion to suspend or modify Chapter 13 plan.” The motion goes to the judge, who then rules on the motion. If the judge approves a pause, the pause may become possible. However, the debtor would likely need to provide a compelling reason why the delay is necessary.

Missing payment plans

Notifying the bankruptcy trustee that one month’s payment may be late or skipped might be better than not paying and not telling the trustee. Some may choose to make a partial payment and then catch up on any money owed on the next due date.

When it appears that making full or even partial monthly payments would be too difficult, filing the motion to request a modification might be unavoidable. Other options may be worth pursuing, including requesting a hardship discharge or changing to Chapter 7 bankruptcy. Those who pass the Chapter 7 means test may find more debt discharged.

Not paying and becoming less than responsible with payments could result in an abrupt dismissal. Once dismissed, bankruptcy protections go away.