What Happens If I Miss a Chapter 13 Payment?
When you miss a payment on your Chapter 13 plan, the judge may dismiss your case. Fortunately, this isn’t an immediate consequence. When you do miss a Chapter 13 payment, you have time and options that can help you avoid a case dismissal.
Immediately contacting your bankruptcy attorney can help you deal with this situation. Whether you realize you won’t be able to make your next payment or have just missed it, consulting with your attorney is essential. Ultimately, you want to prevent the bankruptcy trustee from filing a Motion to Dismiss, and your attorney can help you take the right steps to avoid this outcome.
Your Options When You Miss a Chapter 13 Payment
If you have missed a payment on your Chapter 13 plan, there are a few ways you can address this situation to protect your bankruptcy case.
Catch Up on Your Late Payment
First, you can immediately pay off your missed payment and any applicable late fees or penalties. This might be an effective solution if you simply forgot to submit your payment on time.
If you can complete this payment before the trustee files a motion to dismiss, you might have nothing to worry about; likewise, if the trustee did file a motion to dismiss, they might withdraw it upon receiving your late payment. That said, habitual late payments might compel a trustee to think twice about withdrawing their motion.
Make a Repayment Agreement with the Trustee
Some trustees are willing to accept a repayment agreement when a Chapter 13 filer misses a payment. You’re probably filing for Chapter 13 because you’re already experiencing financial hardship, after all. Should this hardship continue or worsen during bankruptcy, your trustee may be willing to work out a separate repayment agreement to catch up on the initial repayment plan.
Change Your Plan
Chapter 13 plans can last three to five years. It’s not unreasonable for someone’s financial situation to change during that time. If your financial hardship worsens, you may be unable to meet the requirements of your original repayment plan.
In this case, the bankruptcy trustee may be willing to restructure your Chapter 13 plan in a manner that allows you to catch up on your missed payments. This will likely force you to consider making some concessions, such as giving up property you were trying to save, but it can help you protect the rest of your bankruptcy case.
Request to Put Your Payments on Hold
If you are experiencing temporary financial hardship, you can even ask the bankruptcy trustee to put your plan on hold. Known as an abatement of plan payments, this arrangement stops the clock on your Chapter 13 plan for a limited time, allowing you time to deal with your immediate financial hardship.
Keep in mind that requesting abatement only works for your unsecured creditors. If you are using Chapter 13 to cure mortgage arrears, abatement will not work.
Guiding Our Clients Through Chapter 13
Chapter 13 bankruptcy can be a confusing process to go through on your own. Fortunately, you can have experienced guides at your side to help you navigate its complexities. We at Buchalter & Pelphrey Attorneys At Law provide our clients with the legal support necessary to file for and complete Chapter 13 bankruptcy, addressing their unique needs and concerns along the way.
To learn more about how we can help you with bankruptcy, contact us online today.