What Happens if I Miss a Payment in a Chapter 13 Bankruptcy Case?
Missed payments happen, and most debtors are given time to pay their arrears and continue with an otherwise sustainable Chapter 13 bankruptcy plan. Some missed payments are unintentional, while others occur after one-time events such as an unexpected car crash.
The experienced Florence, S.C. Chapter 13 bankruptcy lawyers from Reed Law Firm, P.A. might help you get back on track after a missed payment or, if necessary, petition to modify your monthly payments or obtain early discharge. Discuss your unique needs and concerns with their wage earners’ bankruptcy team today by calling (843) 679-0077 or confidentially connecting with them online.
Options After One Missed Bankruptcy Payment in South Carolina
Do not ignore a missed payment, especially if you anticipate missing the payment before the due date. Simply failing to make a payment without notifying the trustee may result in the dismissal of your case and the resulting loss of bankruptcy protections. However, you can prevent these potential consequences by being honest with the trustee. Discuss the following options after a missed Chapter 13 payment with legal counsel:
Repaying Arrears
If you only missed one payment and your income remains stable, the trustee may give you time to make up the missed payment. Consider working with an attorney to reach an agreement to get you up to date without substantial penalties.
Petitioning to Modify the Bankruptcy Plan
If you missed a payment because your income and expenses have substantially changed, you may need to file a petition to modify your Chapter 13 bankruptcy plan. This could include asking the court to reduce your monthly payment while extending the repayment term or otherwise folding any missed payments into the modified plan. To qualify for modification, you must show substantial changes in circumstances such as job loss or unexpected medical events. Providing evidence of these events and linking them to the missed payment may protect your case from being dismissed for non-payment.
Requesting a Hardship Discharge
In some cases, you may qualify for a Chapter 13 hardship discharge under 11 U.S.C. § 1328(b). This discharge forgives any remaining payments and results in the completion of your bankruptcy plan. To qualify for a hardship discharge under Chapter 13, your bankruptcy lawyer must show the following:
- Uncontrollable changed circumstances (for example, a cancer diagnosis or mass layoffs at work)
- The debtor cannot complete the plan payments
- Creditors received the equivalent of any Chapter 7 liquidation payment
- Modification is not an option
In most cases, hardship discharges are available after significant medical events preventing you from working. Judges also have discretion after certain family traumas and other major life events that occur outside the debtor’s control.
Converting to Chapter 7 Liquidation
If you do not qualify for a hardship discharge, a bankruptcy attorney might request that the court convert your case to Chapter 7 liquidation after a missed payment. This might occur if you no longer have the income necessary to complete the plan, or the court expects you to miss further payments.
Discuss Missed Chapter 13 Payments with a Dedicated Florence, S.C. Bankruptcy Attorney
Addressing a missed payment immediately is the best way to ensure your bankruptcy case is not dismissed. Financial circumstances change, and there are numerous options for South Carolina debtors struggling to make their Chapter 13 payments.
Discuss correcting, modifying, or otherwise requesting discharge after missing a bankruptcy payment with the experienced Florence, S.C. bankruptcy lawyers at Reed Law Firm, P.A. Call (843) 679-0077 or schedule a consultation online today.
