When you file Chapter 13 bankruptcy, it’s a serious commitment to making all of your monthly payments on time for the entire duration of your repayment plan. However, when things happen, like an unexpected emergency surgery or your car is totaled by an act of nature, you may be unable to make your payment on time. Though you may assume this is not a big deal, understanding the impact it can have on your case is critical. The following blog explores what you should know if you miss a Chapter 13 payment and why connecting with an Orange County Chapter 13 bankruptcy lawyer is in your best interest during these overwhelming matters.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is an option that reorganizes the filer’s debts into one monthly payment. They will make this monthly payment to the trustee assigned to your case, who then divides the monthly payments to each creditor. These payments will last three to five years, and once you complete the plan, you can have the remaining eligible debt dismissed.
Filing Chapter 13, though a longer process, helps you keep your property, as the alternative is filing Chapter 7, which liqudates your property to pay off creditors. As such, this option does not put any of your assets at risk. Additionally, you’ll find that Chapter 13 will only remain on your credit report for 7 years instead of 10.
What Happens if I Miss a Payment?
In general, if you miss a Chapter 13 payment, you can face having your case dismissed. However, there are other options you may be able to utilize before your case is permanently dismissed.
If you anticipate missing a payment, one of the best things you can do is contact your trustee to explain the circumstances. They may be able to work with you by differing one or two payments until you can get back on schedule. However, it’s important to understand that they may not be able or willing to work with you in these circumstances. If this is the case and the trustee tries to have your case dismissed, you can file an appeal that explains your circumstances and includes the plan you created that showed how you would get caught up.
Another option is to convert your Chapter 13 case to Chapter 7. Though it can put your assets at risk, by converting your filing, you can still have eligible debts discharged to receive the relief you need. However, you must still qualify for Chapter 7 in order to convert your case.
If you anticipate missing a Chapter 13 payment, the best thing you can do for your situation is to immediately connect with an experienced bankruptcy attorney from the Law Offices of Michael D. Pinsky, P.C. Our team knows how overwhelming it can be if you miss a payment due to the intense consequences which is why we are here to help you work with the trustee to determine the best possible outcome. Connect with our firm today to learn more.
