Missing a single Chapter 13 plan payment usually does not end your case right away, but it does put your case at risk. If you fall behind, the Chapter 13 trustee can ask the court to dismiss your case, which would end your bankruptcy protection and allow creditors to resume collection. The good news is that you often have options to catch up or adjust your plan if you act quickly. At Law Offices of Terrence Fantauzzi, we help Chapter 13 clients respond to missed payments and keep their cases on track.
Does One Missed Payment Get Your Case Dismissed?
Usually not immediately. Trustees understand that people sometimes run into short-term problems. However, missed payments are tracked closely, and once you fall far enough behind, the trustee will typically file a motion to dismiss your case. You will receive notice of the motion and a chance to respond before the court makes a decision.
The key is not to ignore the problem. The longer you wait, the fewer options you may have.
What Happens If Your Case Is Dismissed?
Dismissal can have serious consequences, including:
- The automatic stay ends, so creditors can resume calls, lawsuits, and wage garnishments
- Foreclosure or repossession efforts can restart
- Debts that would have been discharged remain in place
- Interest and fees may continue to build on your balances
- If you refile within one year, the new automatic stay may be limited unless the court extends it
Because Chapter 13 is often used to save a home or vehicle, dismissal can put those assets back in jeopardy.
How Can You Catch Up After Missing a Payment?
If the missed payment was due to a one-time problem, you may be able to simply pay the past-due amount. Contact your attorney right away so a plan can be made before the trustee takes action. In some cases, the trustee may agree to a short period to catch up.
Setting up automatic payments or a wage order, where your employer sends plan payments directly to the trustee, can help prevent future missed payments.
Can You Modify Your Chapter 13 Plan?
Yes. If your income has dropped or your expenses have increased for a longer period, you may be able to request a modification of your plan. A modification could:
- Lower your monthly payment
- Extend the length of the plan, up to the five-year maximum
- Add missed payments to the remaining plan balance
- Change how certain creditors are paid
The court must approve any modification, and your new plan still has to meet Chapter 13 requirements. Learn more about how plans are structured on our Chapter 13 bankruptcy page and in our article on Chapter 13 as a financial reset.
What If You Can No Longer Afford Any Plan?
If your financial situation has changed permanently, you may have other options. You may be able to convert your case to Chapter 7 if you qualify, which could lead to a faster discharge of eligible debts. In limited circumstances involving situations outside your control, the court may grant a hardship discharge even though the plan was not completed. Our bankruptcy FAQ covers more questions about how Chapter 7 and Chapter 13 work.
Get Help Right Away if You Have Missed a Payment
A missed Chapter 13 payment is a problem you can often solve, but only if you act before the trustee moves to dismiss your case. An attorney can help you catch up, modify your plan, or explore other options to protect your property. If you have missed a plan payment or are worried you will, call Law Offices of Terrence Fantauzzi at (909) 552-1238 to speak with a bankruptcy attorney today.
