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What happens when you are late on a Chapter 13 payment?

Chapter 13 bankruptcy is a great way to resolve unpaid bills that have gotten so out of hand that they are impossible to catch up on. However, it is also possible to get behind on your Chapter 13 structured payments after they have been approved by the bankruptcy court. What happens then? Will the bankruptcy proceedings get dismissed?

Under Chapter 13 reorganization, bankruptcy filers have 36 to 60 months in which to participate in a structure repayment plan. The plan usually will not pay off all the debts owed, but at the end of the time period any remaining money owed will be resolved, and the debtor's financial slate will be officially wiped clean. During the payment plan period, monthly payments are made by the debtor to he bankruptcy trustee, who then forwards the payments to the creditors.

However, it is not unheard of for a bankruptcy filer to get behind on his or her monthly Chapter 13 obligations, and then what happens? Well, if the person is only a week late, it probably will not pose a huge problem, and the trustee might not even notice that the payment was late if it doesn't drag on for too long.

In other cases, though late payments can become an issue. In some cases the bankruptcy trustee might choose to file a motion to dismiss the matter following an egregiously late payment. In these cases the bankruptcy filer can oppose the motion to dismiss in court through the assistance of a bankruptcy attorney. However, he or she will definitely need to do whatever is necessary to get caught up on payments and do so as quickly as possible in these cases.

Source: Bankrate, "Is late Chapter 13 payment OK?," Justin Harelik, accessed March 11, 2016

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.