The bankruptcy process is one filled with specific guidelines. Not intended to be difficult, these guidelines are in place to protect both the debtor and the system from abuse. Therefore, anyone considering filing for bankruptcy should be aware of some of the potential snags in the process. In a Chapter 13 filing, even small changes could have a notable impact on the outcome of the case.
Changing The Plan
A Chapter 13 bankruptcy is characterized by the wage earners plan. This plan is the agreement approved by the court that outlines which creditors will get repaid, how much will be repaid, and the amount of time payments will be made until the case is completed. These details are determined by the examination of the type of debts, amount of debts owed, income of the debtor and asset worth. Any changes to the determining factors will also have a marked effect on the details of the repayment plan.
Some common areas of change that occur in a Chapter 13 case are income fluctuations, alterations in fund accounts or assets, and debt differences. For example, if a person was to file for Chapter 13 and be laid off from their job during their ongoing case, it is likely that the amount of payment required as part of the plan would be lowered to compensate for this reduction in income. The same could be true of decreases in fund accounts or assets, or if debt liability was to increase for some reason. On the other hand, an increase in income, funds or assets, or a decrease in debt liability occurs, the amount of payment required could increase.
It is important to note that changes to one’s finances in bankruptcy are a natural part of finance. However, any changes that are purposeful on the part of the debtor could be considered fraudulent and lead to a case dismissal. In other words, quitting a job, acquiring more debt or selling off funds or assets are actions that should be avoided during a Chapter 13 case.