With a few exceptions, the automatic stay prevents creditors from initiating or continuing collection activities such as foreclosure or repossession without requesting permission from the bankruptcy court first.
Since most of your creditors get paid through the Chapter 13 plan, they can obtain relief from the automatic stay permission to resume collection activities if you default on your plan payments. A creditor makes the request by filing a motion to lift the stay. Even if the court already confirmed your case, you'll risk dismissal if you default on your Chapter 13 payments. The bankruptcy trustee will ask the court to dismiss your case for failing to comply with repayment plan requirements and, if granted, the court will terminate your case without a discharge of your debts qualifying debts won't get wiped out.
Running into financial troubles during the Chapter 13 process is not uncommon. Even if you default on your Chapter 13 payments , your case won't automatically get thrown out. You'll still have options to salvage your bankruptcy and save your property.
After the Chapter 13 trustee requests dismissal of your case, you can still ask the court for more time to cure catch up on your default. This option is easiest if you missed a few payments due to an emergency, but you are now back on track and can begin to cure your arrearages. Most trustees and judges will grant you additional time if you can show that you can make up your missed payments. If your circumstances have changed since filing the bankruptcy for example, if your income decreased due to a pay cut , you may ask the court to modify your plan and reduce your monthly payments.
However, this might not be possible if all you are paying through the plan are priority debts and secured debts on property you don't wish to surrender.
Because you must pay these debts in full, the court won't be able to lower your Chapter 13 plan payments. Home Trustee Bio Contact Us. Notice This information is not meant to convey legal advice to an individual seeking Chapter 13 bankruptcy reorganization, but is meant strictly as an educational tool. Dismissal vs. One advantage of filing a Chapter 13 case is that you can get out of it at any time.
But what happens if you do dismiss your case? Dismissing a Chapter 13 case has big consequences, some of which are immediate, and some potentially dangerous to you. Although you get the benefits of no longer being under the control of the bankruptcy court and trustee, you also lose the immediate protection and long-term opportunities of Chapter Dismissal is a relatively drastic step among a number possible one to consider if your circumstances change.
But it can be useful tool when used in the right situation, with a full understanding of how it works. Chapter 13 comes with a right to dismiss. This means that at any point of your case you can get out of the case and out of the bankruptcy system altogether. I feel ripped-off. Before bankruptcy creditors never bothered me.
How did the balance owed for my car increase. I started bankruptcy in April What should I do? Hey Lisa, oh, I am sorry about your experience. Do you have a few minutes to catch up? I also sent an email to the email you provided from my email address.
I am trying to sell my house and thinking of dismissing my Chapter 13 and will pay all credit cards off with the proceeds from the sale of my house. Since I do not have 4 — 6 weeks to wait on the court to give me the ok on and offer. Plus I am having a very hard time securing a rental due to my bankruptcy and I needs a clearance letter. Is this a smart way to go?
Thanks, and chat soon. Your email address will not be published. Skip to content. Converting to Chapter 7 Before a Chapter 13 Dismissal You might have the option to convert to Chapter 7 before the dismissal of your Chapter 13 case. Some common reasons for Chapter 13 case dismissals include: Voluntary dismissal — A Chapter 13 case is a voluntary repayment plan.
A debtor the person who files for bankruptcy relief can quit Chapter 13 at any time. Missed Chapter 13 payments — If you miss your Chapter 13 payments, the courts will dismiss your case. However, most bankruptcy attorneys calculate Chapter 13 plans with a little bit of room that allows for a suspension of payments for three months in case of a hardship. The Chapter 13 trustee and the bankruptcy judge examine the reason for the request very carefully before granting a 3-month deferral of Chapter 13 payments.
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