Vail A. Kaufman, P.A.
Always Free Initial Consultations
301-850-2470 or 800-724-1621

The Government is Shut Down, but what about my Chapter 13 Plan?

While the US Government sent out notices to federal agencies on Monday requesting an "orderly shutdown," it is anything but orderly for your personal life if your one of the 800,000 federal workers experience furlough.

What can make matters even worse is if you're also going through a confirmed Chapter 13 plan.

A Chapter 13 plan is largely based and dependent on a consistent source of income. That income is needed to maintain the plan payments to the Trustee during the life of the plan. When that income fluctuates, there are ramifications on your plan that you need consider.

The change of income caused by the loss of employment, such as the government shutdown, must be dealt with. If you miss plan payments, you stand the possibility of having your case dismissed by the Chapter 13 trustee.

In typical loss of income situations, it is essential you document the change of income and meet with your attorney. You and your attorney can devise a plan that accounts for all of your debts and continues your Chapter 13 without hiccup. In some instances, your income may be reduced sufficiently that converting your Chapter 13 to a Chapter 7 might be possible and advisable.

But a government shutdown isn't typical.

With the temporary, but unknown, length of the government shutdown, many confirmed Chapter 13 filers are concerned with how to make the continued payments. When the judge signed your Chapter 13 order, you became liable to make the required plan payments. If you are unable to make your payments, then the Trustee could potentially file a Motion to Dismiss. If the shutdown continues for an extended period of time, then you need to consult your attorney and file a Motion to Modify your Chapter 13 Plan in order to account for the change in income, as well as, the missed plan payments.

In a typical situation where your income drops significantly, your attorney would be able to create a modification that will allow you to continue the Chapter 13 plan with your new financial circumstances. With the shutdown, you should likely be able to do the same.

But the analysis of your situation doesn't just stop there.

The federal court system could potentially begin running on a skeleton crew of essential personnel on October 15, 2013, should an agreement not be reached. At that time, there will be greater difficulty and delays in getting a modification approved as many court staffers could begin furlough at that time.

In summary, this is a difficult situation with no easy answers. Should you have any issues dealing with your Chapter 13 plan payments due to loss of income as a federal employee, you should contact your attorney as soon as possible. If you don't have one, call us.

No Comments

Leave a comment
Comment Information

Our Office Locations

Vail A. Kaufman, P.A.
8955 Edmonston Road
Suite A
Greenbelt, MD 20770

Toll Free: 800-724-1621
Phone: 301-850-2470
Fax: 301-513-0434
Greenbelt Law Office Map