The period between the time a Chapter 13 plan is filed and confirmed by the bankruptcy court is crucial. Debtors are expected to begin making their Chapter 13 plan payments (on time), and (some) creditors are expected to object to the debtors’ Chapter 13 plan, which may complicate confirmation. A qualified bankruptcy attorney can help debtors avoid these complications and get a Chapter 13 plan confirmed.
During this pivotal time, debtors may become delinquent in making their monthly plan payments. If this occurs, the Chapter 13 bankruptcy trustee or a creditor will file a motion asking the court to dismiss the case. Yet, when this happens, debtors still have available options to prevent the court from dismissing the case.
The first and most obvious option is to become current on payments. Perhaps the payment was late because an unexpected source of income was delayed. This may not really be an option if the debtor simply does not have the money. Yet, circumstances may arise where debtors can become current on their plan payments. This is naturally the first choice to solve any delinquency.
The second option is to allow the present case to be dismissed and file a new bankruptcy case. If a Chapter 13 case is unaffordable because debtors are having difficulty making monthly plan payments, a voluntary dismissal may be appropriate under the circumstances. Keep in mind that filing another Chapter 13 case soon after dismissing one may require a debtor to request the bankruptcy court extend the automatic stay, since it may be ineffective in the second bankruptcy case. This is a complex analysis that requires the review of a knowledgeable bankruptcy attorney.
The next, and seemingly most often used option is to file a motion for a moratorium on plan payments and amended Chapter 13 plan. Debtors may file a motion may be filed to place a moratorium, or temporarily suspend their Chapter 13 plan payments. Debtors must also provide an adequate reason in support of the request. Typically, a moratorium lasts for three months. Any moratorium will increase the monthly amount of plan payments in the future since there is a delinquency to repay.
Debtors may convert a Chapter 13 case to a Chapter 7 case, which may not be an option if the debtor is trying to discharge priority debts or cure mortgage arrearages. Finally, a debtor may request an early Chapter 13 discharge before completing his or her plan based on hardship. However, rarely granted, a hardship discharge is subject to the same limitations as a Chapter 7 case.
The Morrison Law Group strives for complete client satisfaction with the services we provide over the course of a bankruptcy case, as well as the ongoing services that we provide post-bankruptcy. Not all Utah Bankruptcy attorneys can make this statement, but the Morrison Law Group is not like other Utah bankruptcy law firms. The Morrison Law Group can help if you just want to discuss your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.