If You Can't Make Plan Payments

If for some reason you cannot finish a Chapter 13 repayment plan -- for example, you lose your job six months into the plan and can't keep up the payments -- the bankruptcy trustee may modify your plan. The trustee may:

• give you a grace period, if the problem looks temporary
• reduce your total monthly payments, or
• extend the repayment period.

If the bankruptcy court won't let you modify your plan or give you a hardship discharge, you can:

• convert to a Chapter 7 bankruptcy, unless you received a Chapter 7 bankruptcy discharge within the last eight years or a Chapter 13 bankruptcy discharge within the last six years, or
• ask the bankruptcy court to dismiss your Chapter 13 bankruptcy case. You would still owe your debts. However, any payments you made during your plan would be deducted from those debts. On the flip side, your creditors will be able to add on interest they did not charge while your Chapter 13 case was pending.

How a Chapter 13 Case Ends

Once you complete your repayment plan, all remaining debts that are eligible for discharge will be wiped out. Before you can receive a discharge, you must show the court that you are current on your child support and/or alimony obligations, and that you have completed a budget counseling course with an agency approved by the United States Trustee. (This requirement is separate from the mandatory credit counseling you must undergo before filing for bankruptcy -- you can find a list of approved agencies at the Trustee's website, http://www.usdoj.gov/ust/, and click "Credit Counseling and Debtor Education.")