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Getting behind on Chapter 13 bankruptcy payments

On Behalf of | Apr 17, 2023 | Chapter 13 Bankruptcy |

Approximately 5.17 people out of 1,000 files for bankruptcy in Tennessee, double the national average. Many of these individuals file for Chapter 13 bankruptcy because it lets them keep their assets while getting caught up on payments. While most people make timely payments monthly, some get behind on payments. Then, people worry about the consequences of making no or late payments.

Making one late payment

Generally, making one late payment is not a big deal. In most cases, you have 30 days from when the payment was due to make it. At the same time, communicate with the bankruptcy trustee handling your case to let them know why the payment is late and when to expect it.

Habitually not making Chapter 13 payments

If you ignore your Chapter 13 bankruptcy payments, the court can stop providing you with bankruptcy protection. In that case, your creditors can insist on full payment using whatever legal means are available.

Modify Your Chapter 13 Payments

If changes, like a job loss, have made it impossible for you to make your Chapter 13 payments on time, then you can ask your trustee and the court to modify your payment plan. This is often an option if a percentage of your monthly payments went to nonsecure creditors, but it may not be helpful if the payments were only to secure creditors.

Convert to Chapter 7 Bankruptcy

Some people who initially filed for a Chapter 13 bankruptcy can later convert to a Chapter 7 bankruptcy. To do this, you must qualify for Chapter 7 bankruptcy, including the means test on your income. Assuming you are eligible, you must file a Notice of Conversion with the court and pay additional court costs.

There are several options available if you get behind on Chapter 13 payments. The best step is to talk to your trustee to see which option will work best for you.