Filing for bankruptcy is not a decision many make lightly given the nature of these matters. However, this can offer much-needed financial relief for those struggling with overwhelming debt. While filing for Chapter 13 can help you reorganize payments, you can still experience financial strain. As such, it’s not uncommon for filers to wonder what will happen if they are late or miss Chapter 13 payments. The following blog explores the importance of ensuring your payments are on time and what you can expect if you fall behind. Additionally, you’ll learn why it’s in your best interest to connect with a Memphis, TN consumer bankruptcy lawyer who can help you through these times.
How Does Chapter 13 Bankruptcy Work?
When you are in an overwhelming amount of debt, you may explore all relief options before deciding that filing for bankruptcy is in your best interest. This process involves working with a bankruptcy trustee and determining a monthly payment amount. This essentially consolidates our debt into one monthly amount, and your trustee is responsible for allocating funds to the creditors. This payment plan will last between three and five years, depending on the details of your case.
What Happens if I’m Late on Chapter 13 Payments?
If you are late on a Chapter 13 payment, it’s important to understand the consequences you can face. Generally, being a few days late on a payment may not end with your case being dismissed, but this is not guaranteed. If you know you will be late, it’s in your best interest to contact the trustee assigned to your case to explain your circumstances. They may be able to work out an agreement with you to remedy the issue. Similarly, your case may be converted to Chapter 7, which will result in the liquidation of your assets by the trustee to satisfy the creditor’s demands. This means your assets are at risk, but you can continue the bankruptcy process. However, this is not a guarantee and late or missed payments should be avoided at all costs.
If you are a month late on your payment, the consequences will be severe. In the worst case, you’ll find that if you are a month late on your payment, the trustee assigned to your case can petition the court to close your case by filing a Motion to Dismiss for Material Default. As such, your case will end with no resolution like the discharge of remaining debts, and the automatic stay set in place when your file will be lifted. It is critical to emphasize the importance of ensuring you are on time with payments.
Filing for bankruptcy can be overwhelming, so it’s in your best interest to connect with an experienced attorney who can help you through these complicated matters. At the Arnold Law Firm, we understand how overwhelming this can be and why it may seem easy to miss a due date. That’s why we’re here to help you through these challenges. Contact us today to learn more.
