Legal matters, once set in motion, can be difficult to stop. If you have reason to regret your decision to file, or you have issues preventing you from following up on a filing, you may be able to change your mind in some circumstances. Read on to learn more.
Chapter 13 Debt Reorganization Plans
Unlike a chapter 7 bankruptcy, a chapter 13 plan helps consumers reorganize their debts. Filers are able to form a plan that makes it possible to pay off part of their debts during a several-year payment schedule. At the end of the bankruptcy, the unpaid debts are forgiven as long as the payment plan has been adhered to. A chapter 7 plan, on the other hand, is usually over in a matter of months, leaving filers with their secured (credit card, medical, personal loans) debt entirely wiped out. Trying to stop a chapter 7 from proceeding may be near impossible, but you may have more options when dealing with a chapter 13.
Modifying Your Chapter 13 Plan
You must agree to the terms and repayment plan, but some filers have problems complying with the plan. You should know that you may not have to have your bankruptcy dismissed before it is complete – you might be able to have it modified. This could allow you to have the debt relief you need and still make it easier to comply with the plan. Speak to your bankruptcy attorney to learn more about modifying your chapter 13 plan.
Problems with Your Chapter 13 Plan
Some common issues that filers may have with their chapter 13 plan include being unable to fulfill the payment terms. Often, the amount of your minimum payment to a given creditor has been reduced, but it may not be reduced enough. What might have seemed doable when you agreed to the plan may now be a burden. The cost of living is only rising, and other debt obligations may have arisen since you began your reorganization. Additionally, it is likely that not all of your debts can be included in a chapter 13 filing. Taxes are a perfect example of that. If you have an unexpected tax debt to repay, your chapter 13 plan may now be unmanageable.
Request a Dismissal
Regardless of the reason, it's not necessary to give the bankruptcy trustee overseeing your chapter 13 plan any reason at all for requesting a dismissal. This is accomplished by sending a certified letter to your trustee informing them of your request.
The Ramifications of the Dismissal
Once your chapter 13 is dismissed, you are once again responsible for the unpaid portion of the debts and will have no protection against collection actions or court judgments. No matter the bankruptcy type or the reason, speak to your attorney about modifications, switching from a 13 to a 7 type, or filing again in the future before you take action for a dismissal.