What if I Miss a Chapter 13 Bankruptcy Payment?

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Once you make your final payment in your Chapter 13 repayment plan, the New York bankruptcy court may grant you a discharge order to wipe out the remaining balance of your qualifying, dischargeable debt. With that being said, you do not want to do anything that may jeopardize this opportunity for this last lick of relief, such as missing your scheduled bankruptcy payments. Continue reading to learn what happens if you miss a bankruptcy payment and how a seasoned Rockland County Chapter 13 bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you get back on track.

What happens if I miss one of my Chapter 13 bankruptcy payments?

Firstly, you must understand what your Chapter 13 bankruptcy repayment plan entails. Essentially, this repayment plan may allow you to restructure your debt and pay it off within a manageable three- to five-year timeframe. This is considered a privilege granted by the New York bankruptcy court that you must not take advantage of. Therefore, missing a scheduled payment in your court-approved repayment plan may hurt your Chapter 13 bankruptcy proceedings.

For one, the court may rule that your Chapter 13 bankruptcy case be dismissed altogether. At the very least, it may order that your case be converted into a Chapter 7 bankruptcy case. Evidently, you may not be allotted the same benefits in Chapter 7 bankruptcy as you had in Chapter 13 bankruptcy. For example, your bankruptcy trustee may now hold the right to liquidate your nonexempt assets to pay off your outstanding creditors.

Is it possible to make changes to my Chapter 13 bankruptcy repayment plan?

You may rest assured knowing that missing just one scheduled payment within your Chapter 13 repayment plan may not be the end of the world. That is, you may be able to speak with your bankruptcy trustee about the financial emergency that arose or otherwise the reasonable explanation for your missed payment. In turn, you may work with your trustee to devise a rational and manageable plan for making up this missed payment.

However, say that you anticipate your missed payment being more than just a one-time incident. In this case, you may have to formally file a motion with the New York bankruptcy court to modify your repayment plan. With this, you may have to provide the court and your trustee with proof that your financial circumstances have changed, and thereby a modification is necessary. Further, you must emphasize that such changes in your financial circumstances were beyond your reasonable control. And in a more drastic situation, you may go as far as petitioning for a hardship discharge.

When handling an urgent matter like this one, you must drop everything and call a competent Rockland County bankruptcy attorney. Our team at The Law Offices of Allen A. Kolber, Esq. can help you pick up the pieces.