You may have filed for a Chapter 13 bankruptcy, believing it was the right solution for your situation. Unlike a Chapter 7 bankruptcy, which discharges all your qualifying debts, a Chapter 13 bankruptcy sets you up with a payment plan for your debts.
A Chapter 13 bankruptcy involves making monthly payments for 3-5 years until your debts are paid off, while allowing you to keep assets, such as your home.
However, the economy today may be making it harder for you to keep up with your monthly payments. An unexpected event can also destroy your monthly budget, leaving you having to make hard choices.
Communicate with your trustee
Unlike some debts, there is no grace period with your Chapter 13 bankruptcy payments. However, while you should try to never miss a Chapter 13 payment, missing one by a day or two may not necessarily affect your plan.
If you do know you are going to be late with a payment, contact your trustee immediately and tell them the reason and give them a date you expect to make the payment. They might be able to arrange a modified arrangement with creditors, but there is no guarantee.
Do everything possible to not miss or be late with any other payments. A bankruptcy court may understand a one-time late payment due to an unexpected emergency but will not want to see a pattern of late payments.
Your case could be dismissed or converted to Chapter 7
When you do miss a payment, a bankruptcy court can dismiss your bankruptcy case altogether, leaving you right back where you started. The bankruptcy court can also choose to convert your case to a Chapter 7 bankruptcy.
Your property can be at risk if your case is converted to a Chapter 7 since your trustee can sell your property to pay your debts.
Despite your good faith efforts, there may be a month you simply do not have enough money for the payment. A bankruptcy attorney can be a good resource if you are having trouble making your payments.
