Help After Chapter 13 Bankruptcy Dismissed for Nonpayment
Also applies to Voluntary Self Dismissal
Finding help after Chapter 13 bankruptcy is dismissed for nonpayment is not easy. Every Chapter 13 bankruptcy case is different and comes with its own challenges. While I would like to help everyone facing this tough financial situation, I have to focus on working with consumers who will directly benefit from my advice and services.
The intent of this page is to help you figure out whether or not my debt settlement approach might improve your situation. Here are the basics on which post-dismissal situations I can potentially help with:
It breaks down to whether the debts included in the Chapter 13 petitions are SECURED, UNSECURED, or a COMBINATION of both types.
SECURED DEBTS ONLY — If the debts in your plan petition are solely related to mortgages or other secured obligations (such as auto loans), then this is NOT the type of situation I would recommend for the debt settlement strategy.
If you filed your Chapter 13 to halt a foreclosure and buy time to save your home, and you were dismissed for nonpayment, get legal help from your attorney asap! If the original lawyer who filed your bankruptcy is no longer available, then please seek other legal resources for assistance. It may be possible to re-file your plan with different terms, or work with the lender to resolve the situation. But since the debts involved are SECURED by property, deeply discounted payoffs are not an expected option.
UNSECURED DEBTS ONLY — If your debts are primarily from unsecured accounts such as credit cards, personal loans, or store charge cards, then I can potentially be of help to you. If you were dismissed for nonpayment then you should definitely keep reading for further insight. And if you decided to voluntarily dismiss your Chapter 13 case due to improved financial circumstances, it still makes sense to consider debt settlement. Either way, please keep reading!
COMBINATION of SECURED & UNSECURED — If you included both secured and unsecured obligations in the Chapter 13 petition, then I can help you with respect to that group of accounts that are unsecured. I’m not able to help with mortgage related debts, sorry. Seek legal advice from an attorney if the secured accounts are your main concern. For any outstanding unsecured claims though, it still makes sense to consider the debt settlement approach for those accounts unless you are intending to re-file your petition with the court.
Help! How Can I Afford Settlements When I Wasn’t Able to Keep Paying on My Chapter 13 Plan?
After reading to this point, you might find yourself scratching your head about something crucial. If your Chapter 13 bankruptcy was dismissed for nonpayment, that happened because you couldn’t keep up with the required plan payments month after month. How then are you supposed to pay for settlement on the debts instead?
There’s no question that debt settlement only makes sense if there are adequate financial resources to work with. Good intentions are important, but your creditors want money! The reality, however, is that many consumers who get booted out of their Chapter 13 cases DO have sufficient financial resources to settle out on the debts.
Funding settlements comes down to available assets, disposable income, and time. I’ll elaborate further below, but first let’s review the two basic types of settlements.
Two Types of Settlements: Lump Sum vs. Term
When you settle a debt, creditors would rather get paid the settlement amount and move on. So single payments are preferred and usually yield the lowest possible settlement percentages. We call this a LUMP SUM settlement, and we’d still call it that even if the creditor allows us to break up the amount into two or three chunks over 60-90 days.
The other approach is a TERM settlement, defined as an agreement to pay the negotiated settlement over a period of six months or more. In many cases, particularly with debt buyers, it’s possible to negotiate term settlements stretching over 12-24 months, with 36 and even 48 month terms being potentially available.
Help After Chapter 13 Bankruptcy — “Dismissed for Nonpayment” Does Not Mean You Are Broke!
You filed Chapter 13 because you could not file under Chapter 7 and get an easy discharge, right? One of the main reasons that happened is that your income was above the median for your locale, which blocked you from Chapter 7 bankruptcy.
So you are working, or you probably wouldn’t have filed Chapter 13. It’s just that the payment set by the court was too high, a theoretical calculation that didn’t match up with your real world living expenses.
What if the monthly payment was lower? What if it was WITHIN YOUR MEANS? Wouldn’t that have made all the difference in the world?
Let’s say you had $60,000 of unsecured debt in a 100% Chapter 13 plan over 60 months. That means a payment of $1,000 per month, like clockwork for 5 straight years. After a few months of that you realize you’re coming up a few hundred dollars short every month.
Let’s solve that problem and also get it done in TWO YEARS instead of FIVE YEARS? Chop the $60k in half through negotiated settlements so you only have to come up with $30k instead of double that. Then go find $30k between available assets (borrowing from family, 401k loan, selling stuff) and disposable income over the two years.
Using a blend of lump sums (tax refunds come to mind here), along with monthly payments you can handle, it’s possible to get the job done. The more you can come up with in chunks, the less you’ll have to commit to in the form of monthly payments. The point is that with some custom tailoring by an expert like myself, there is a solution here worth investigating further.
Next Steps for Help After Chapter 13 Dismissal
If you want to learn how I work, then please read my series on Tailored Debt Settlement. You don’t want a traditional debt settlement company for the job of post dismissal negotiations. It requires a level of expertise based on years of experience. I don’t accept everyone as a client, but if you’re excited by what you’ve read here today and want to talk with me, then please start with an email to [email protected]. Include some details on your Chapter 13 dismissal situation and I’ll see if I can help. Thanks for reading, and best wishes for your financial future.