What happens if I fall behind on my chapter 13 plan payments?

chapter 13 plan payments

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If you’ve been making your plan payments to your Chapter 13 bankruptcy trustee but then something happens (e.g., lose a job, get divorced/separated, get hurt at work, have an unexpected expense (medical, vehicle, house), etc.) and you can’t make your payments then you will fall behind and the trustee will eventually bring a motion to dismiss your case.

First, it’s always better to let your attorney know as soon as something happens if you know you won’t make your monthly payment than to wait until the trustee brings a motion to dismiss.  We might be able to “Suspend” your payments temporarily until you can get back on track.

If your payments are suspended you might have to increase the amount of your remaining payments to make up for the missed payments … and that might make your plan unfeasible (i.e., you might not realistically have the disposable income each month going forward to make the higher payment).

In some instances, it might make sense to just let your case get dismissed and file another Chapter 13 so your payments won’t increase beyond your ability to pay.  But in other instances it might make sense to try to convert your Chapter 13 to a Chapter 7 case, if you’ve had a significant change in income and/or expenses which make you unable to continue to stay in a Chapter 13.

It is also usually better to at least make a partial payment if you can’t make a full payment in any given month.

If you’re having trouble making your Chapter 13 plan payments please contact one of our attorneys to find out what your options are.

By Errin Stowell, W M Law Attorney

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Jeffrey L. Wagoner


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