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Missing a Chapter 13 plan payment: not the end of the road

When you file a Chapter 13 bankruptcy, you have to come up with a plan for making some payment to some of your creditors. How much you pay and to whom depends on a variety of factors, and calculations can be complex, so it helps to consult with an experienced bankruptcy attorney. He or she can usually help you come up with a plan that the court is likely to approve.

Once your plan is confirmed, you are responsible for making monthly payments to the trustee. Sometimes the trustee takes the money directly out of your paycheck.Other times, you must mail payment or make it via an online portal. For numerous reasons, someone might fall behind on Chapter 13 payments. Perhaps your employer failed to take out money appropriately and forward it to the trustee. You might have changed jobs and not caught up on paperwork. In some cases, you may have experienced a temporary financial crisis that caused you to be unable to make a monthly payment.

In most cases, falling a week or two behind isn't too problematic. You can even calculate and make weekly or biweekly payments, as long as you are making enough payments to cover your monthly requirements. If you do fall behind enough for the trustee to notice -- especially if the trustee is paying your mortgage out of the funds during the repayment plan -- he or she might file a Motion to Dismiss your case.

The Motion to Dismiss doesn't mean that your case is automatically done. Instead, it usually provides a few months for you to catch back up with your payments, as the hearing is set in the future. You do need to communicate with your attorney immediately if this happens to see what you need to do to get back on track with your Chapter 13 case.

Source: Bankrate, "Is late Chapter 13 payment OK?," accessed April 07, 2017

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Joshua Z. Goldblum, Attorney at Law
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