Going through Chapter 13 bankruptcy in New York is difficult enough on its own. But what happens when you can’t make the payments on your plan due to sudden financial challenges?
Deferrals can be a temporary solution for those who are unable to make their Chapter 13 payments due to a financial hardship. Usually, payments can be put on hold for a month or two, giving you time to get things sorted out. If you’re still unable to make the payments, you’ll need to consider requesting a modification to your plan or switching to Chapter 7 bankruptcy. A qualified bankruptcy attorney in New York can help determine the best solution for your needs.
In this guide, we’ll delve into the depths of deferral periods and consequences if you miss a payment. And that’s not all; we’ll explore managing other obligations during bankruptcy and when it may be time to reevaluate your current payment plan.
Exploring Chapter 13 Bankruptcy Payment Deferral
If you’re grappling with a financial crunch, deferring your Chapter 13 bankruptcy payments could be a viable temporary solution. Let’s understand what this entails.
The Deferral Period for Chapter 13 Payments
During tough times, the court may allow you to defer your bankruptcy payments for up to two months. The U.S. Courts website details how this works in practice.
This brief respite is not an escape route but more of a breathing space to get back on track financially. It might help you avoid further complications down the line.
To obtain such relief, however, requires navigating through some legal hoops. Your attorney will need to file appropriate motions and provide justifications for why payment suspension is necessary at that time – maybe due to sudden job loss or a medical emergency.
Consequences of Missing a Chapter 13 Payment
Falling behind on one payment probably isn’t a big deal. But several missed payments can cause consequences such as:
- You risk losing protection against creditors who then have every right under law to resume collection activities. This could mean wage garnishments or foreclosure proceedings.
- Your credit score takes another hit as late or missed payments are reported by the trustee handling your case.
- In worst cases scenario, if too many payments are skipped without seeking any adjustment from court, your case could be dismissed altogether.
Remember, Chapter 13 bankruptcy is not about dodging debt but reorganizing it into manageable payments over a three to five-year period. The goal is always to stay on course and fulfill the commitment.
Managing Mortgage and Car Payments During Bankruptcy
It may appear reasonable to take care of your mortgage or car loan payments yourself when you’re filing for Chapter 13 bankruptcy. But did you know it’s actually more beneficial for these payments to be made straight into your Chapter 13 plan?
This approach helps ensure that the trustee has full oversight of all payments, which could prevent future issues with creditors claiming they haven’t received their due share. Plus, making direct payments into your plan also means there’s less chance of missing any key deadlines — remember, punctuality matters.
Recognizing When Payments are Too High
Falling behind on multiple obligations may be an indication that something’s not quite right with your payment scheme. It could signal that what you’re currently paying is too high compared with what you earn and have budgeted for monthly expenses.
If this sounds familiar, don’t fret – it happens. In fact, 9% of individuals undergoing a Chapter 13 bankruptcy encounter similar difficulties. The trick lies in recognizing this problem early enough so adjustments can be made promptly.
The Role of a Bankruptcy Attorney or Trustee
So, you’ve identified that your payments might be too high. What’s next? This is where a bankruptcy attorney or trustee comes into play. They’re like the financial sherpa guiding you up the treacherous slopes of debt mountain – except they do it with legal expertise and knowledge on all things bankruptcy.
Your lawyer will partner with you, checking if there’s wiggle room to tweak your payment plan based on what you earn and spend.
Navigating the waters of Chapter 13 bankruptcy can be a daunting journey. But remember, there are options available like deferring payments to weather financial storms.
You also now know that falling behind on multiple payments could indicate it’s time for a change. The importance of managing obligations like mortgage or car loans during this process is crucial too.
Finally, never underestimate the power of professional help when learning how to defer Chapter 13 bankruptcy payments. A trustee or attorney could become your best ally!
To schedule a free consultation, contact The Law Office of William Waldner. We specialize in Chapter 13 bankruptcies in New York.