Bankruptcy is a legal process and once you commit to it putting a halt to proceedings may cause unanticipated events to occur. A chapter 7 bankruptcy is a lot harder to stop due to the relatively short period of time it takes for one to be complete, but chapter 13 bankruptcies can take several years to be complete. A lot can happen during that time, so read on to learn more about getting a dismissal from your chapter 13 bankruptcy.
A repayment plan
With a chapter 7 bankruptcy, your debts are almost entirely forgiven and it's all over within a matter of months, not years. A chapter 13 doesn't eliminate your debts; it just restructures them to allow you more time to pay them. The chapter 13 bankruptcy codes have the power to make your creditors offer you better repayment plans that take some of the monthly burden from your budget. Often you won't need to pay interest or penalties while your payments get stretched out for years.
Why would a filer request a dismissal from a chapter 13 bankruptcy?
There are several motivations for requesting the bankruptcy be ended summarily, but you should fully understand the ramifications of such an action on your debts. In some cases, your bankruptcy attorney will advise you to attempt some modifications on your current plan rather than cancel the entire bankruptcy by requesting a dismissal. Here are some common issues that might arise with a chapter 13 debt repayment plan:
Your monthly minimum payments have become a burden. In some instances, a creditor will agree to a further reduction in payments but only if the debt can still be paid off in the previously-agreed-upon time period.
Your financial obligations have increased since you initially filed the chapter 13. The cost of living never goes down and it can be almost impossible to predict your future financial needs and obligations. For example, tax debts cannot be forgiven or dealt with in either a chapter 13 or a chapter 7 bankruptcy filing. If you get audited or incur an unexpected tax debt during your chapter 13 repayment plan period you might no longer be able to pay the agreed upon sums to the other creditors.
Requesting a dismissal is quite simple You should send a certified letter signed by both filers (if pertinent) to your chapter 13 bankruptcy trustee. Filers are not required to give a reason for the request and most trustees have little interest in that aspect since it is your legal right to request the dismissal. Make sure your attorney is aware of your actions beforehand.
What happens next?
Any money paid during the repayment plan is credited, but the balance and all interest and penalties will become due. You will no longer have the protection of the automatic stay and attempts to collect the debts can begin again. Finally, if you fail to make payments then you are, once again, in jeopardy of losing your property. You may be able to file chapter 13 again or to file a chapter 7 once you obey the time restraints. Speak to your attorney to learn more.