Will I lose my bankruptcy protection if I missed some payments required by my Chapter 13 bankruptcy plan?

If you can’t make your Chapter 13 bankruptcy payments, call your bankruptcy lawyer immediately. Missing bankruptcy payments is not an uncommon problem, and it can sometimes be fixed, but ignoring it will make it worse.

Your bankruptcy trustee will usually move to dismiss the case after you miss two payments. In some cases, you can make up the payments. If this is an option, the trustee will usually not seek dismissal of the bankruptcy. If you can’t make up the payments right away, you may have some other options, but you’ll need to talk to your bankruptcy attorney to determine which is best for you. If your plan is less than 60 months, you may be able to extend the length of the plan to incorporate the missed payments and additional charges. A Chapter 13 plan cannot be extended to more than 60 months, so if your plan is already 60 months, you can’t extend it further, but you may be able to increase the remaining plan payments by the amount needed. In some cases, you may be able to give up some secured property (usually a car) for which payments are being made under the plan. The property will reduce the debt that it secured, and the money saved on that debt can be used to catch you up. In some cases, the only option may be to allow the case to be dismissed and re-file Chapter 13 to get an additional 60 months to make all required payments.

If something has dramatically changed with your finances or your health (i.e. you have since become disabled), you may qualify for other options like a hardship discharge or converting your filing to a Chapter 7.  The decision to re-file or convert can have a significant impact on your prior exemptions, so be sure to review all of your options with your attorney before you make a final decision.

Case Studies: Handling Missed Payments in Chapter 13 Bankruptcy

Case Study 1: Prompt Communication With Bankruptcy Lawyer

Sarah encountered financial difficulties and found herself unable to make the required payments under her Chapter 13 bankruptcy plan. Worried about potential consequences, she immediately reached out to her bankruptcy lawyer to discuss her situation. The lawyer advised her on available options and helped her negotiate a plan to make up the missed payments. By proactively addressing the issue, Sarah avoided dismissal of her bankruptcy case and successfully fulfilled her obligations.

Case Study 2: Exploring Alternative Solutions

John missed several Chapter 13 bankruptcy payments due to unforeseen medical expenses. Feeling overwhelmed, he consulted his bankruptcy attorney to explore potential solutions. After carefully reviewing John’s financial circumstances, the attorney suggested applying for a hardship discharge or converting to a Chapter 7 bankruptcy. The attorney explained the implications of each option, and John decided to convert to Chapter 7 bankruptcy, which better suited his current situation.

Case Study 3: Utilizing Extended Repayment Plan

Michael faced financial setbacks that led to missed payments in his Chapter 13 bankruptcy plan. His bankruptcy trustee informed him that, since his plan was less than 60 months, he could extend the plan’s length to incorporate the missed payments. Michael chose this option and worked with his trustee to create an extended repayment plan. By adhering to the revised plan, Michael successfully caught up on his missed payments and remained on track to complete his bankruptcy.