There are circumstances in Chapter 13 Las Vegas bankruptcy that make maintaining a confirmed repayment plan difficult. Often a job loss or another issue causes a sudden change in income that cripples the debtor’s chances to complete the repayment plan. Fortunately, section 1329(a) of the bankruptcy code affords debtors the opportunity of modifying their repayment plans. By simply contacting an experienced Las Vegas bankruptcy lawyer, debtors can reduce their monthly payments on the plan, extend the time period for repayment, alter the distribution to any of the creditors, or reduce the amount owed on the plan to cover health insurance costs. The only limitation is that the plan cannot go beyond five years.
Despite these options, many debtors do nothing. This is a mistake, and there are at least four compelling reasons to reach for the phone, call their lawyers, and stick to the plans:
- Debts will be discharged. The greatest long-term benefit of bankruptcy is discharging unsecured debts. Without this, a fresh start can’t be achieved.
- The Automatic Stay remains in place. If the plan is terminated and the debtor falls out of bankruptcy, the creditors can resume collection proceedings and foreclosure. These are things well worth avoiding.
- Second mortgage liens won’t be stripped. Many underwater homeowners discharged their underwater second (or higher) mortgages in a Chapter 7 bankruptcy and are using Chapter 13 not for a discharge but to strip the lien off the loan. That way the creditor can’t foreclose if the debtor stops paying. Staying on the repayment plan keeps this benefit alive.
- Getting what you paid for. There’s no point in paying an attorney, all the filing fees, showing up to the 341 meeting, and everything else for nothing. Finishing the plan ensures that debtors get what they pay for.
Modifying a Chapter 13 plan is worthwhile if it’s possible. If it’s not, there are still other options such as a hardship discharge or converting the case to Chapter 7. Otherwise, there’s no reason to walk away without at least trying to get what you’ve already paid for.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.