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Whether you just started your Chapter 13 repayment plan or a few years in, the unexpected can happen. If you discover that you’ve missed a payment for whatever reason, understanding the consequences is critical. Unfortunately, this can significantly impact your case, so preparing yourself is vital. Additionally, you’ll want to connect with a Memphis, TN Chapter 13 bankruptcy lawyer to explore your legal options. Keep reading to learn more about your options if you are going to miss a Chapter 13 payment.

What Is Chapter 13 Bankruptcy?

When considering your bankruptcy options, understanding the different Chapters available is critical. Unfortunately, many are unsure of how to proceed through these matters. One of the most important things you’ll want to consider is whether or not Chapter 13 is right for you. Generally, if you make above the median income for the state you’re filing in, you must file Chapter 13. If you are below that income, you can choose to file for Chapter 7 instead, which involves the liquidation of your assets.

However, Chapter 13 repayments mean you will begin a payment plan based on your disposable income. This will generally last three to five years, depending on the specifics of your case. You will make a payment each month, and the trustee assigned to your case will then distribute these funds to your creditors. At the end of your payment plan, all eligible debts will be discharged. Additionally, this will remain on your credit report for seven years.

What Will Happen if I Miss a Chapter 13 Payment?

If you miss a Chapter 13 payment, it’s imperative to understand the consequences. Generally, skipping a month will result in the dismissal of your case. This means your case is closed, and creditors are free to continue collection efforts against you, including lawsuits.

Another option is that the courts convert your case into a Chapter 7 filing. As a result, they will sell some of your unprotected property to pay off creditors.

If you are going to be late on your payment, you can explain your circumstances to the trustee before missing the date, and you’ll find they may be more outstanding. However, it’s best if late or missed payments can be avoided, as they may not be willing to work with you.

In the event your financial circumstances change, you’ll find that you may be able to have your payments reduced if you file a motion with proof of the situation.

It’s imperative to understand that missing even one payment during your bankruptcy filing can cause irreparable damage. As such, it’s in your best interest to connect with an experienced attorney as soon as possible when you are going through issues related to your bankruptcy case. Connect with the team at the Arnold Law Firm today if you’re ready to file to learn how we can guide you through these challenging times.