Successfully completing a chapter 13 bankruptcy attorney Brooklyn NY repayment plan requires careful planning and budgeting. All debtors filing in that chapter will undoubtedly have some fixed costs, usually auto-loan payments or a residential mortgage, that will go into the plan. Then debtors will have to account for not-so-fixed costs. These would be daily necessities, such as groceries, vehicle fuel, etc. It’s not that debtors’ consumption of the quantities of these goods changes much; rather, their prices can swing quite wildly—often against debtors. Here are some ways to account for these volatile price changes.
One trick is to depend less on the commodity. Admittedly, I called these “daily necessities,” but there is some truth to changing consumption patterns. Moreover, once debtors are in chapter 13 they should be streamlining their budgets anyway, but these suggestions still stand. Buying cheaper groceries, or cooking less expensive meals will help. When it comes to cars, driving less (especially in winter), biking or riding mass transit more, or even making sure your tires are full of air will all reduce debtors’ exposure to volatile gas prices.
After exploring those avenues, debtors have more legalistic options. The easiest one is to modify the repayment plan by filing a motion with the bankruptcy court and then explaining the reason for doing so. Almost certainly, the creditors with the most to lose are those holding low-priority unsecured claims, but as long as the plan still meets the basic parameters, then debtors should be okay. (Click to read about four ways a chapter 13 bankruptcy repayment plan can be modified for more details.)
The next option is giving up on chapter 13 by either filing for a hardship discharge or converting the case to chapter 7. Bankruptcy courts will permit hardship discharges for “reasons that the debtor should not be justly held accountable.” Usually these are pretty extreme circumstances, so higher gas prices might not be sufficient. (Click to read about when you should try for a hardship discharge in chapter 13.)
Conversion to chapter 7 requires some paperwork by debtors, and they will need to attend a new 341 meeting of the creditors, but if it’s impossible to meet obligations to unsecured creditors due to increases in commodity prices, then simply discharging those debts should work. Debtors will lose the benefits of chapter 13, which may have been a serious motivation for filing in that chapter in the first place. (For more information read why convert a chapter 13 bankruptcy to chapter 7?)
Finally, if debtors think that chapter 13 would provide advantages they want, but their budgets are too tight, then it might be preferable to file in chapter 7 first to discharge their unsecured debts, and then file in chapter 13, even if it means forgoing the discharge. However, volatile prices will affect a repayment plan a lot less.
Just as future prices can be uncertain, so too can the paths of chapter 13 plans. If you are experiencing financial difficulties, then talking to an experienced New York bankruptcy lawyer is the best way to minimize those uncertainties.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
