Can the trustee dismiss my Chapter 13 bankruptcy if I miss a plan payment?

If you fall behind in your Chapter 13 plan payments, the bankruptcy court could dismiss your case.

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Question

I have made all of my Chapter 13 plan payments on time since filing my bankruptcy over a year ago. But I had some unexpected expenses last month and could not make my last plan payment. Can the trustee dismiss my Chapter 13 case?

Answer

If you fail to make your Chapter 13 plan payments, the bankruptcy trustee can ask the court to dismiss your bankruptcy. But if you are not significantly behind and have a history of making timely payments, the trustee may not request dismissal. Even if the trustee does request dismissal due to one missed plan payment, the court might not dismiss your case.

How Does a Chapter 13 Plan Work?

When you file for Chapter 13 bankruptcy, you agree to pay back a portion of your debts through a repayment plan. To complete your Chapter 13 case and get a discharge, you must make monthly plan payments to the trustee assigned to your case. When the trustee receives each payment, he or she uses the funds to pay your creditors in accordance with the terms of your plan. (Learn more about the Chapter 13 repayment plan.)

What Happens If You Miss Your Plan Payments?

It’s extremely important to make timely plan payments in Chapter 13 bankruptcy. If you miss a plan payment, the trustee can file a motion with the court to dismiss your bankruptcy. If you have missed only one payment, the trustee may decide not to file a motion to dismiss and simply allow you to catch up during the remainder of your bankruptcy. But keep in mind that this is at the trustee’s discretion and your particular trustee might seek dismissal even if you miss one payment.

What Can You Do If the Trustee Files a Motion to Dismiss?

If the trustee files a motion to dismiss your Chapter 13 bankruptcy, he or she will send you a copy of the motion and notice. The motion will specify the reasons why the trustee believes your case should be dismissed. The notice will typically contain instructions on how to respond to the motion and set forth the deadline for opposing it. If you don’t want your bankruptcy to get dismissed, you will usually need to file a written opposition to the motion with the court and ask that the judge set the matter for a hearing.

At the hearing, you will have to explain to the judge why you should be allowed to continue with your bankruptcy. In many cases, if you are not substantially behind and have a good payment history, the judge will allow you a certain amount of time to get caught up on your missed payments. But if you can’t show the court that you can afford your plan payments, the judge will typically dismiss your case.

What If You Can’t Afford Your Chapter 13 Plan Payments?

Even if you can’t make your Chapter 13 plan payments, you may still have several options available to you. Depending on your individual circumstances, if you can’t afford your current plan payment, you may be able to:

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