Can the Chapter 13 trustee dismiss my case if I've missed a couple of payments?

Question:

I've been making payments on a Chapter 13 repayment plan for more than two years. I recently fell behind on my payments and my trustee has petitioned for a dismissal. What can I expect if I go to court?

Answer:

Once you get through the courthouse doors, the trustee will likely argue that your plan is no longer feasible -- that you cannot make the payments and therefore your creditors aren't getting paid and protected through bankruptcy.

You have several options depending on your circumstances:

  • Show the court that you can get back on track with your plan.
  • Propose an amended plan with payments that are feasible for you and provide a sufficient amount to your creditors.
  • Ask the court for a hardship discharge. You'll have to meet several requirements in order to get this. To learn more, see The Chapter 13 Hardship Discharge.
  • Convert your Chapter 13 bankruptcy to a Chapter 7 case.  

If the court agrees with the trustee and dismisses your case, you'll owe your creditors the current balance on your debts -- that is, what you owed at the start of your bankruptcy case, less the amounts you paid through your repayment plan -- plus the interest that stopped accruing while you were in bankruptcy.

To learn more about the above options, see If You Can't Complete Your Chapter 13 Plan Payment.

by: , J.D.

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