Request a Hardship Discharge

• If something catastrophic occurs that changes your circumstances and it is not a short-term problem, the court might grant you a hardship discharge. File a motion with the bankruptcy court requesting permission to stop your payments due to unforeseen hardship. The court might award you an early discharge if the blow to your earning potential is not likely to change in the foreseeable future. Your odds of success also increase if you’re far enough along in your plan that your creditors have been paid as much, if not more, than they would have received if you’d filed for Chapter 7 instead. A hardship discharge eliminates your debts and relieves you of responsibility for them just as though you had completed your Chapter 13 plan.
  
  

Modify Your Plan

• Your other option is to ask the court to lower your payments or to allow you to miss a few payments while you get back on your feet. If your hardship is temporary, the judge might grant you this sort of relief instead of a hardship discharge when you file your motion. It depends a great deal on whether he feels that what’s happened to you has long-term ramifications.
  
  

Convert to Chapter 7

• If you only just started making your Chapter 13 payments and your repayment plan is young, speak with an attorney to find out if you might be better off asking the court to change your bankruptcy to a Chapter 7 instead. The downside to this is that you might not be able to save your home if this was the reason you chose a Chapter 13 plan to start with. In a Chapter 7 bankruptcy, your trustee will sell assets that exceed certain exemptions allowed to you by your state’s laws. He'll use the money raised from the sales to pay your creditors as much as possible. If you convert to Chapter 7, your bankruptcy will be over and done in a few months, erasing your debts just as if you had completed your Chapter 13 plan. If you no longer have the income to keep up with your mortgage payments as well as your Chapter 13 payments, the court will dismiss your Chapter 13 plan and your mortgage lender could foreclose anyway.
  
  

If You Do Nothing

• If you do nothing and simply stop making your payments, either your trustee or one of your creditors will eventually file a motion with the court to ask to have your Chapter 13 plan dismissed. If this happens, you lose the automatic stay that keeps your creditors from trying to collect payment from you. You’re right back where you started, unable to pay your bills but with no court protection. If you can’t make your payments, let your attorney know as soon as possible so he can guide you to another course of action. If you don’t have an attorney, consult with one so he can more fully explain your options.