The Commitment of a Chapter 13 Plan
When a bankruptcy court confirms your Chapter 13 plan, you are committing to make monthly payments to the trustee for three to five years. These payments fund distributions to your creditors — priority debts like taxes and domestic support obligations first, then secured creditors, then unsecured creditors. Missing payments disrupts this distribution and puts your case at risk.
That said, life happens. Job losses, medical emergencies, and unexpected expenses are the same forces that drove many people into bankruptcy in the first place. The Bankruptcy Code anticipates that circumstances change and provides several mechanisms for debtors who fall behind during their plan. Understanding these options early — before a trustee files a motion to dismiss — is the key to protecting your case.
What Happens Immediately After a Missed Payment
Chapter 13 trustees monitor plan payments closely. Most trustees require payments by a specific date each month, and many file a motion to dismiss relatively quickly after a payment is missed — sometimes within 30 to 60 days. The timeline varies by district and trustee, but you should not assume you have months to catch up without taking action.
When the trustee files a motion to dismiss, the court sets a hearing date. You will receive notice of the hearing. At the hearing, you must either demonstrate that you have caught up on payments, present a plan to catch up, or request a modification of the plan. If you do nothing, the court will likely dismiss your case.
Option 1: Catch Up on Missed Payments
The simplest solution is to cure the arrearage — pay the missed amounts — before the trustee files a motion or before the hearing date. If you missed one payment due to a temporary cash flow problem and can make a double payment the following month, notify your attorney immediately so they can communicate with the trustee and avoid a motion being filed.
Some trustees will agree to a "cure period" — a short window to catch up — if you contact them promptly and demonstrate that the missed payment was a temporary setback rather than an ongoing inability to pay. Your attorney can negotiate this on your behalf.
Option 2: Modify the Plan
Under 11 U.S.C. § 1329, you can modify a confirmed Chapter 13 plan at any time before the plan is completed. A modification can:
- Reduce the monthly plan payment if your income has decreased
- Extend the plan from three years to five years to lower the monthly payment
- Adjust how specific creditors are treated
- Incorporate new debts or changes in secured debt balances
A plan modification requires filing a modified plan with the court, serving it on creditors, and obtaining court approval. Creditors have the right to object. The process typically takes 60 to 90 days, but your attorney can often negotiate with the trustee to suspend the motion to dismiss while the modification is pending.
Plan modification is the most common solution when a debtor's income has permanently decreased — for example, after a job loss, reduction in hours, or a new medical expense that significantly increases monthly costs.
Option 3: Convert to Chapter 7
If your financial situation has changed so significantly that you can no longer fund a Chapter 13 plan — and you now qualify for Chapter 7 based on your current income — you can convert your case to Chapter 7 under 11 U.S.C. § 1307(a). Conversion is a right, not a request; you do not need court approval to convert from Chapter 13 to Chapter 7.
Converting to Chapter 7 has significant consequences:
- The Chapter 7 trustee will review your assets as of the conversion date. Any assets you acquired during the Chapter 13 case that are not exempt may be liquidated.
- If you were using Chapter 13 to save a home from foreclosure, conversion to Chapter 7 will end that protection. The automatic stay will remain in place temporarily, but Chapter 7 cannot cure mortgage arrears.
- Debts that were being paid through the Chapter 13 plan — such as mortgage arrears or car loan arrears — will no longer be cured. You will need to address those debts separately.
Conversion makes the most sense when your primary goal was unsecured debt discharge (not saving a home or car), your income has dropped below the means test threshold, and you have no significant non-exempt assets acquired during the Chapter 13 case.
Option 4: Request a Hardship Discharge
In limited circumstances, a debtor who cannot complete a Chapter 13 plan may receive a "hardship discharge" under 11 U.S.C. § 1328(b). A hardship discharge is available only if:
- The failure to complete the plan is due to circumstances beyond your control and for which you cannot justly be held accountable (such as a serious illness or disability);
- Creditors have received at least as much as they would have received in a Chapter 7 liquidation; and
- Modification of the plan is not practicable.
Hardship discharges are granted infrequently because the standard is demanding. However, if you have suffered a catastrophic change in circumstances — a permanent disability, a terminal illness, or a natural disaster — it is worth discussing with your attorney.
Note that a hardship discharge is narrower than a standard Chapter 13 discharge: it does not discharge debts that would be non-dischargeable in Chapter 7, and it does not discharge long-term debts (like mortgages) that extend beyond the plan period.
What Happens If Your Case Is Dismissed
If your Chapter 13 case is dismissed without a discharge, the automatic stay terminates and creditors can immediately resume collection activity. Mortgage lenders can proceed with foreclosure. Wage garnishments can restart. Creditor lawsuits can continue.
You can refile bankruptcy after a dismissal, but if you have had two or more cases dismissed within the past year, the automatic stay may be limited to 30 days or may not apply at all in the new case. This is why it is critical to address missed payments proactively — before dismissal — rather than waiting for the case to be dismissed and then refiling.
The Most Important Step: Contact Your Attorney Immediately
If you have missed a Chapter 13 plan payment or anticipate missing one, contact your bankruptcy attorney immediately. Do not wait for the trustee to file a motion. An experienced attorney can assess your options, negotiate with the trustee, and file a plan modification before the situation escalates. Many missed-payment situations that seem dire can be resolved with prompt action.
If you do not yet have an attorney, use our directory to find a bankruptcy attorney near you who handles Chapter 13 cases. Many offer free consultations and can advise you on your options even if you filed your original case elsewhere.
Take our free Debt Relief Options Quiz to understand whether Chapter 13, Chapter 7, or another approach may be right for your situation.
