Filing for Chapter 13 bankruptcy lets you repay your debts through a court-approved plan over three to five years.
If this is your first time going through bankruptcy, you might ask; “Who sets that payment plan?” More importantly, what happens if you miss a payment? Knowing how the process works in the Southern District of Florida can help you stay on track and avoid setbacks.
Your plan needs court approval
You and an attorney will create a repayment plan that fits your income, necessary living expenses and the type of debt you owe. If your income is below the Florida median for your household size, your plan usually lasts three years. If it’s above, the plan typically runs for five years.
Even though you propose the plan, it must be reviewed by the trustee assigned to your case in Miami. The trustee may suggest changes. Creditors can also raise objections. The U.S. Bankruptcy Court for the Southern District of Florida makes the final decision. The judge will check that your plan follows the law and treats everyone fairly.
Once the plan is approved, you must follow the payment schedule. Missing payments may lead to case dismissal and the loss of bankruptcy benefits, such as stopping creditor collections.
What happens if you miss a payment
If you miss a scheduled payment, the trustee may ask the court to dismiss your case. This could end your bankruptcy protection and allow creditors to resume collection efforts. The court won’t dismiss your case after just one missed payment, but it will pay close attention to whether you are keeping up with the plan to pay consistently as agreed.
As soon as you know you can’t make a payment, contact your attorney or the court immediately to explore your options.
Your options after missing a payment
Falling behind on your Chapter 13 payments doesn’t automatically mean your case will be dismissed. However, you must act quickly to avoid serious issues. Depending on your circumstances, the court may allow changes to your plan, such as:
- Modifying your plan: Changing the payment terms to match your current income and expenses
- Suspending payments temporarily: Asking the court for a short payment break during a financial hardship
- Converting to Chapter 7: Switching to a Chapter 7 bankruptcy if your financial situation worsens
You’ll need a valid reason, such as losing your job or paying unexpected medical bills. Your attorney can help you file the right request and explain how it could affect your case.
The sooner you seek legal guidance, the more options you may have to protect your bankruptcy case.
Legal guidance can help you stay compliant
An experienced Miami bankruptcy attorney can help you build a solid repayment plan and deal with any issues. If you’ve missed a payment or think you might, consulting with a lawyer early may protect your case and give you a better chance at a fresh start.
