Before
filing for bankruptcy, it is crucial to understand all the facts.
Since you may not be an expert in bankruptcy law, the questions you
might have about the process have answers that are anything but
clear. Not only are there different types of bankruptcy, Chapter 7
and Chapter 13, but there are also significant differences between
the two.
One
of the most common questions about Chapter 13 bankruptcy is what
happens if your financial situation changes during the duration of
the plan? After all, a Chapter 13 plan typically runs between three
to five years and there are a lot of things that can happen in that
period of time. What happens if you or your spouse lose a job, get
sick or in an accident and incur medical expenses, or have a change
in family size?
Fortunately,
Chapter 13 bankruptcy offers a great deal of flexibility in the event
of a change of income or expenses during the duration of the plan.
Many times the court can agree to modify your plan to make it work.
This often involves a lowering of monthly payments which debtors are
obligated to pay.
Other
times, the changes may need to be made even before a first payment is
sent. Sometimes debtors are still unable to pay their mortgage even
with the restructuring of their debt in Chapter 13. In cases like
this, a modification is necessary. If the situation that you are
experiencing is only a short-term problem, the court may grant a
moratorium in payments if it will allow you an opportunity to recover
from an illness, one-time expense, or some other temporary cash flow
problem.
If
your situation changes significantly for the worse, Chapter 13 has
what is called a “hardship discharge”. This happens when a
Chapter 13 plan is confirmed but circumstances come up that prevent
the debtor from completing the plan. However, there are stipulations
to a hardship discharge which make it available only if: the failure
to pay comes from circumstances beyond the debtor’s control,
creditors have received at least as much money as they would have
received under Chapter 7 where assets are liquidated, and if
modification of the plan is impossible.
Bankruptcy
can be complicated, which is why you need an attorney who can get
things right the first time. A lawyer who works exclusively on
bankruptcy and keeps up with the newest trends in the industry can
put that knowledge to work for you. Let’s face it, unemployment,
garnishments, and repossessions can happen to anyone. When bad things
happen to good people, and you are filing for bankruptcy in NY, the
bankruptcy attorneys at Doyaga and Schaefer are here to help. Stop
the harassment, the worry, the financial stress. For a free same-day
consultation, call 718-488-7500 or 516-656-7500, or visit our website
at bigapplebankruptcy.com for more information.