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What happens if I am late on my Chapter 13 payments?

Being late on your debt payments may have been what caused you to consider going into Chapter 13 proceedings in the first place. However, under Chapter 13 bankruptcy the payments do not stop. Although the monthly payments under a debt restructuring plan will be dramatically less and much more affordable, they will still need to be paid and if a debtor gets behind it could cause some serious problems.

In cases where a debtor is frequently late in making his or her Chapter 13 payments, the bankruptcy trustee may choose to file to dismiss the bankruptcy. Due to changing life circumstances and other issues, an expected expense might crop up that prevents a debtor from meeting his Chapter 13 obligations. The trustee will in most situations send a notice to the debtor to pay the amount owed. Hopefully, the debtor can pay the amount owed quickly and avoid any further issues.

In some cases, a bankruptcy trustee might require the automatic deduction of payments from the debtor's paycheck. This wage garnishment might resolve the problem of getting payments on time. Still, debtors must review their pay stubs to ensure that the money is actually being deducted because they will ultimately be the ones held responsible if it is not.

If a substantial change in financial circumstances happens to occur, debtors may wish to seek a Chapter 13 modification. In some cases, a payment plan extension may be possible, or the amount of money paid to creditors could be reduced in order to resolve the financial discrepancies posed by the change in financial circumstances.

Ultimately, debtors will want to do everything they can to avoid the dismissal of their bankruptcies. This means paying their Chapter payment 13 obligations on time. However, if circumstances make this impossible, legal strategies are available to help sidestep the dismissal of a debtor's bankruptcy process.

Source: Geeksonfinance, "What If I Am Late on My Chapter 13 Payments?," accessed March 11, 2016

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Bryan P. Keenan & Associates, PC

993 Greentree Road
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