Chapter 13 Bankruptcy Filings Can Be Changed During The Process

There will always be cases where things change after your bankruptcy filing has been put into motion. For those who have filed chapter 13 bankruptcy in Chicago it often turns out that they cannot actually make the agreed upon 3-5 year payments and must change their filing.

If this is the situation there are a couple of logical solutions. The first option to explore is a hardship discharge. This is something that you would have to qualify for by showing a drastic decrease in income, death of a financially contributing spouse etc. The only way a hardship discharge will be granted is if you have made enough payments that the creditors have received as much money as they would have if you had filed for chapter 7 bankruptcy. The court would determine if a hardship discharge was acceptable in your situation. It is not the favored solution by the court.

In the event that you do not qualify for a hardship discharge you still have a couple options.

Modification of the payment plan set up in your chapter 13 filing is more acceptable solution. When you request modification you are showing hardship and asking for a temporary or long term solution to help you fulfill your agreement. In some cases the payments you make towards you debt will be decreased or potentially stopped all together for a period of time.

If the filer is really over their head and cannot qualify for a hardship discharge and modification is still to much, they can convert their filing to chapter 7 bankruptcy. This means that all their assets will be liquidated in an effort to pay off the debts owed. This is sometimes a choice of the filer but in other cases a chapter 13 filing may be forced into conversion by creditors due to late or insufficient payments.

There is always the rare case where things take a turn for the positive after someone has filed chapter 13 and they can now afford their payments without issue. In this circumstance the bankruptcy case is dismissed and everything will go back to normal. Creditors will be looking for payments again and all debt will be the responsibility of the debtor again.

It is best to avoid a lot of changes in your bankruptcy filing. That is why it is so important to enlist the help of a qualified bankruptcy attorney. This person can help you evaluate your sitation to ensure that you choose the most logical form of bankruptcy for you.

Chang and Carlin Disclaimer
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.