When you file for Chapter 13 bankruptcy, you make a repayment plan that all of your creditors agree to. You then have an obligation to make each of your payments on time. If you are going to be late or miss a payment, you need to be ready to fix the problem right away. A Montgomery County Chapter 13 bankruptcy lawyer can tell you why sticking to your payment plan is so important.
Can My Bankruptcy Case Be Dismissed If I Miss a Payment?
The big risk here is that your case can be dismissed if you miss a payment. That’s a dismissal, not a discharge. A discharge clears debt, but a dismissal can mean that you are still on the hook for a significant portion of your liabilities.
Another possibility is that your Chapter 13 bankruptcy gets changed into a Chapter 7 bankruptcy in a bid to satisfy your creditors. This means that your assets will be sold off to pay what you owe. Neither of these options are ideal.
What Should I Do If I Think I’ll Miss a Payment?
If you do think that you’re going to have to miss a payment or be late with one, be proactive! Contact your bankruptcy trustee and let them know what’s happening. Talk to your lawyer as well. Otherwise, it just looks like you forgot or didn’t care enough to make your payment. That can reflect poorly on you and make it more likely that your case gets dismissed.
Sometimes we just encounter some unexpected hardships and it throws off our plans. This is something that the bankruptcy trustee and the court should understand. If you are upfront about your problems and make a good-faith effort to catch up with your repayment plan, that’s going to be acceptable in most situations.
Can My Repayment Plan Be Changed?
One missed or late payment is understandable. You may even get away with being late one or two more times. You need to be honest if you think that this is going to keep happening though.
If you are no longer able to meet your obligations, you need to ask for a modification. In some cases, a bankruptcy repayment plan can be changed to lower payments and extend the repayment timeline. It may also be possible to get a hardship discharge if your situation is serious enough.
Extending your repayment period and having to worry about your debts for another few months can be annoying, but it’s much better than getting your case dismissed. If that happens your creditors are almost certain to come after you for what you owe again.
Contact Our Bankruptcy Attorneys
The bankruptcy process can be complicated, so we don’t recommend going through it alone. Contact Mudrick & Zucker to schedule a consultation and learn more about what our lawyers can do to help you get your fresh financial start.
