What to do about a Chapter 13 and a balloon payment?

I have 11 months left to pay off the remainder of a Chapter 13. However, there is also a balloon payment at the end of the bankruptcy that requires payment. I recently divorced and have paid 100% of the bankruptcy up to this point. Also, recently the Trustee decided to change the payment plan so that it is based upon income, so my ex must pay 32% of the debt. My ex cannot pay the 32% and wishes to deconsolidate the plan and go into Chapter 7. What does that mean for me and my plan moving forward? Does anything change with my obligation to pay the remaining payments? Am I still required to pay 100% of the payments in the 13? Also, I cannot pay the balloon amount required. Can 401k funds be pulled to pay the balloon payment?

Asked on November 1, 2013 under Bankruptcy Law, Indiana

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Based upon what you have written about you are obligated to make the payments under the Chapter 13 plan until it is changed per court order. Given the foreseeable problems down the line you need to file a petition with the court to modify the Chapter 13 repayment plan that you are under so you can make payments under a new plan that you can afford.


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