Will a chapter 13 bankruptcy be dismissed if I miss a payment?

Chapter 13 bankruptcy dismissal for nonpayment is a possible if you miss more than one payment. Chapter 13 is a legal option which allows you to pay secured and unsecured creditors over a three to five years under a repayment plan. If you can make up the missed payments before the bankruptcy trustee notices, then there’s a possibility that the chapter 13 won’t be dismissed.

However, two things can happen when you miss more than one chapter 13 bankruptcy payment. For instance, creditors such as a mortgage lender can petition for the automatic stay. If granted, the creditors are allowed to start or continue wage garnishments, foreclosure and lawsuits.

The bankruptcy trustee can also file a motion for the chapter 13 bankruptcy to be dismissed. The trustee may argue that the repayment plan is no longer feasible because you can’t make the payments. If the U.S. Bankruptcy Courts agree with the bankruptcy trustee, you chapter 13 case is dismissed. Thus, you’ll owe the creditors the money you put in the plan and interest that may have incurred during your bankruptcy petition.

Before any of the worst case scenarios occur, talk with your bankruptcy lawyer. Your lawyer will advise you of what can be do to either keep your bankruptcy alive or stop the bankruptcy trustee from dismissing case. For instance, your bankruptcy lawyer may petition the bankruptcy court for a modification. The modification can suspend payments for a short period of time.