When problems arise in a chapter 13 New York bankruptcy repayment plan, probably the most common suggestion for staying on track is filing a motion to modify the plan. Usually this means extending the plan’s length, when it’s under 60 months, or changing the monthly payment. There are alternatives to modifying the plan, but they’re more drastic: converting the case to chapter 7 or asking for a hardship discharge.
These options can be right for some debtors, but others might foresee situations that will require more than a modification but less than a conversion or discharge. For example, a debtor might require dental surgery that isn’t covered by his or her health care plan. The debtor needs the money that would go to the plan soon, but it doesn’t seem fair that missing a month’s worth of payments should jeopardize the entire plan.
In these circumstances, the debtor might benefit from filing a motion to suspend the plan, which works as it sounds, except the bankruptcy court can’t grant it easily. Debtors must show that there’s some kind of cause necessitating the suspension beyond feeling unable to pay for that month. Suspensions seldom last more than three months.
Suspensions come with a snag: Secured creditors still need to be paid, and the suspension only affects the payments to the trustee. Creditors may file motions to lift the automatic stay to pursue debtors who’ve received valid suspensions, and fighting these motions will cost money too.
Even without these challenges, debtors must still make up the lost income in future payments, which creates another consideration for the debtor. Moreover, some creditors might want the debtor to get current on the debts owed them before the plan ends. For instance, a lender might want a mortgage it is owed caught up within six months. This is one more reason for debtors to make sure they get the math right or else they’ll be in even deeper trouble.
Navigating around sudden problems in a chapter 13 bankruptcy is a benefit of hiring an experienced New York bankruptcy lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
