Did you lose your job in Chapter 13? You may have way more options than you may think. If you have lost your job in Chapter 13, you may be able to continue your Chapter 13 case or even pursue better options. You can modify your Chapter 13, switch to Chapter 7, or even pursue other options if you cannot afford your current payment.
Losing your job during Chapter 13 can be solved many times by modifying your Chapter 13 case. If your income has dropped, you still may be able to afford a lesser payment to allow you to stay in your Chapter 13 case. Cases that were previously paying large amounts to unsecured creditors can be modified the easiest. You will simply start a lower payment based on your new lower income.
Other times you can modify your case in a way that will simply suspend payments for 3 months. This can sometimes be enough time to find new employment. On certain cases, it may not be possible to permanently (or even temporarily) lower payments. In these cases, you can usually still get away with not paying the case for a few months. However, when you resume payments, your new monthly payment may need to increase to make up the difference.
If you lose your job during Chapter 13, you can also many times fix the situation by switching your case to Chapter 7. Depending on the facts of your case, you would either convert your current case to Chapter 7 or just file a new Chapter 7 after your case dismisses. Chapter 7 will allow you to eliminate debt much more quickly in a way that can be very advantageous if you have recently lost your job.
There are other options if you lose your job during Chapter 13. These options are outside of bankruptcy. For addressing a mortgage issue, loan modifications are a very powerful non-bankruptcy option for coming back up to date. People frequently pursue loan modifications if their mortgage is behind and their Chapter 13 case gets dismissed.
Debt Settlement and refinancing can also provide additional options when unexpected job loss occurs during Chapter 13. Creditors may take as little as 10-20% if they see that collection is slow or unlikely. Sometimes a settlement can be an option when all else has failed. Even if 3-6 months pass before you get a new job, you could be able to settle some of your debts. The delay in payment may even make the creditors much more inclined to settle.
Do you have more questions about Chapter 13 Bankruptcy? Check out our Chapter 13 Bankruptcy Client Tools page for more information.