Chapter 13 bankruptcy allows you to keep your property while paying off your debts through a court-approved repayment plan that generally lasts three to five years. That arrangement can provide much-needed structure when you are struggling financially, but it also comes with an obligation to keep your payments current.
Falling behind on payments can give the trustee grounds to seek dismissal, which means asking the bankruptcy court to dismiss your case. You may then need to respond within a specified timeframe to explain why the case should continue or how the payment problem can be resolved.
If your case is dismissed, creditors may then resume collection efforts or pursue remedies that had been blocked by the automatic stay. You may still be eligible to file afresh, but the consequences may be far-reaching.
Can you fix a missed Chapter 13 payment?
A single missed payment does not necessarily result in immediate dismissal. If the missed payment is temporary and you can bring the plan current, catching up may be the simplest solution.
If your financial circumstances have changed significantly, continuing to make an unaffordable payment may not be realistic, and you may have options beyond simply trying to catch up. In some cases, you may be able to request a Chapter 13 plan modification that adjusts your payment terms to reflect a significant change in your financial circumstances.
Why legal guidance matters after a missed payment
The right response depends on why you missed the payment, how far behind you are and whether your current Chapter 13 plan remains workable. If the trustee seeks dismissal because you have fallen behind, you need to respond promptly and take appropriate steps to address the default.
The sooner you act, the more options you may have. Legal guidance can help you understand your options and determine the most appropriate path forward.