Have you ever wondered what happens if you miss a Chapter 13 plan payment? The short answer is that your bankruptcy case could be dismissed, but this doesn’t happen immediately, so there is a chance to get back on track. 

When seeking a Chapter 13 bankruptcy discharge, petitioners must make their plan’s monthly payments to the bankruptcy court. As this is a requirement for Chapter 13 bankruptcy, you can see how missing a payment could jeopardize your entire bankruptcy case. In most cases, there are actions you can take to fix the situation. 

Each Chapter 13 trustee handles missed payments differently. Different districts handle the process slightly differently, so it can be beneficial to consult with an experienced bankruptcy attorney familiar with the bankruptcy court and bankruptcy trustees in your local area if there is a problem with your Chapter 13 plan. If you miss a payment or know you will miss a payment, contact your local Tennessee or Georgia bankruptcy attorney as soon as possible. 

When a Chapter 13 bankruptcy petitioner misses a play payment, their bankruptcy trustee may file a “Motion to Dismiss for Material Default.” If the motion is granted, the bankruptcy case is dismissed. If the bankruptcy case is dismissed, the petitioner does not receive a discharge of debt. Most bankruptcy trustees will not immediately file a Motion to Dismiss for one missed payment – you may be okay if you catch up on the missed payment before the next payment is due. If your Chapter 13 plan payments get two months behind, most trustees will file the Motion to Dismiss. At three missed payments, almost every bankruptcy trustee will file the motion. Don’t consider this permission to miss a payment. As stated, every bankruptcy trustee handles missed payments differently, and yours could decide to file a motion immediately. Each payment missed also makes the problem more challenging to resolve. Be proactive if you fear a missed payment is on the horizon, and reach out to your bankruptcy attorney. 

If you miss a Chapter 13 plan payment (or multiple payments), and your bankruptcy trustee files a Motion to Dismiss for Material Default, the court will schedule a hearing. If the issue isn’t resolved before the hearing, the bankruptcy judge will require an explanation for the missed payment/s. The judge takes any explanation into consideration when deciding if the bankruptcy case should be dismissed or if there is a more appropriate solution available. If a Motion to Dismiss is filed in your bankruptcy case, it is best to resolve the situation before the hearing. 

Frequently the case is dismissed because of the default in payments. That does not necessarily mean that your life as you know it is over. Don’t give up hope that perhaps you might still retain your house and car! It is wise to immediately seek consultation with counsel. Ken Rannick frequently meets with debtors whose case has recently been dismissed and then accepts that debtor as a client, files a new case, (frequently with a lower plan payment that before), and the case successfully moves forward.

If you need to file Chapter 13 bankruptcy and are worried that you will miss a Chapter 13 bankruptcy plan payment, discuss your options with an experienced bankruptcy attorney. Don’t hesitate to call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.

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