You'll still have options to salvage your bankruptcy and save your property. Even if you default on your Chapter 13 payments, your case won't automatically get thrown out. Running into financial troubles during the Chapter 13 process is not uncommon. What Are Your Options to Save Your Bankruptcy?
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). Your Chapter 13 Bankruptcy Might Get DismissedĮven if the court already confirmed your case, you'll risk dismissal if you default on your Chapter 13 payments. A creditor makes the request by filing a motion to lift the stay. 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. 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. Creditors Might Obtain Relief From the Automatic StayĪn automatic stay is put into place the moment you file for bankruptcy. If the amount confirmed is higher-which it usually is-the plan payment will be adjusted so that you can complete the plan within the agreed-upon three- or five-year repayment period. If you don't make your plan payments, your bankruptcy case will not get confirmed.Ĭonfirmations often get delayed when the trustee or creditor objects to the original proposed Chapter 13 plan. Even though this "confirmation" (approval) process sometimes takes many months, you'll start making payments approximately a month after you file, and you'll keep your monthly plan payments current before confirmation. Your Chapter 13 Bankruptcy Might Not Get ConfirmedĪfter filing your bankruptcy case, the bankruptcy court will determine the feasibility of your proposed repayment plan. Here's what could happen if you fail to pay your payments. Consequences of Defaulting on Chapter 13 Plan Payments Learn about some of the possible consequences you could run into if you don't make a Chapter 13 repayment plan payment, as well as options to save your bankruptcy. Or the court might dismiss your case or never approve it in the first place. It can lead to your creditors obtaining permission from the court to foreclose on your house or repossess your car. Defaulting (failing to make payments) on your Chapter 13 plan has many unfortunate consequences.