What Happens if my Chapter 13 Case is Dismissed?
Earlier this week, I wrote a post entitled Should I Oppose the Chapter 13 Trustee’s Motion to Dismiss. In that post I spoke about the relatively common scenario whereby a Chapter 13 debtor will fall behind on payments to the trustee or an unexpected claim will cause the plan to run longer than 60 months. In such a case, the trustee will file a motion to dismiss and the debtor and counsel will have an opportunity to propose a cure to the delinquency. Usually this cure takes the form of a lump sum payment immediately with the remaining delinquency paid to the trustee over time.
What happens if the proposed cure is not feasible for the debtor? In such a case, the judge would sustain the trustee’s motion to dismiss or the debtor would not oppose the motion. Either way, the debtor’s Chapter 13 case will be dismissed.
When a Chapter 13 case is dismissed, creditors can immediately pursue all non-bankruptcy alternatives. If there is a home and mortgage delinquency involved, the mortgage lender can start foreclosure proceedings. If there is a car payment involved, the car lender can immediately start the repossession process. Credit card lenders can restart collection efforts including calls and letters.
More importantly creditor claims go back to their pre-bankruptcy status. If, for example your Chapter 13 plan called for a payment amounting to 5 cents on the dollar to unsecured creditors, a dismissal would give those unsecured creditors the right to pursue 100% of balances due + interest.
The law does allow a debtor to refile Chapter 13, but there are strings attached. In a refiled case the automatic stay (the core protection of bankruptcy) would only last 30 days – your attorney would need to file a special motion asking the judge to keep the stay in effect beyond 30 days.
Generally, if case #1 was dismissed because of circumstances beyond the debtor’s control – i.e. a job loss or illness – judges will be amenable to extending the stay and eventually approving a 2nd plan. However, 2nd cases are inherently looked at with suspicion by Chapter 13 trustees.
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I am very confused and can’t seem to get the answers I need from my lawyer. filed for chapter 7 in November, means test indicated we should file chaper 13. we paid the additional fees, and have always gotten our attorney everything they have asked for right away..like the same day. seemed like it took them forever to file the chapter 13. when it was finally filed, the creditors stopped calling and a meeting of the creditors was scheduled for March. That was rescheduled for May because not all of the creditors had replied. Then about a month ago, we got a letter from the trustee indicating the case was dismissed because of bad adresses of the creditors that had not been addressed. lawyer said not to worry, they are re filing. In the mean time everyone we were advised to stop paying wants their money. What should I expect from this point? We want to keep our house, we are afraid of forclosure. What exactly is my attorney doing??
@lisa – this does not add up. When you convert from Chapter 7 to Chapter 13, all creditors get notified automatically. Typically the actual conversion is a 2 page document, but you (the debtor) must file new schedules for the Chapter 13. I don’t know what you mean by the statement “not all the creditors had replied.” You case might get dismissed if no schedules were filed but not because of bad addresses for creditors, unless your judge required proper addresses in an order. Is it possible that your lawyer did not file Chapter 13 schedules on time? It might be wise to get a second opinion.
My Ch 13 plan was confirmed in Dec. 2010. I am behind 2 month payments and trustee has filed motion to dismiss. I am behind bcs I am separated- husband (has left house yet refuses to take name off deed) has not helped, Ive been paying the 1200 per month but am underemployed at the moment. I am barely surviving.
My Bkrptcy atty advised I must have 2400 (back pymnts) by next week or there is a hearing for dismissal. What can I do? If I can lower the payments to 900 its do-able….Im doing this all on my own, husband is a deadbeat- are there any motions to extend or help lower my payments? I am very responsible and owe nothing, except the house payment. Please help.
@Lisa: Trust your attorney. Do not panic.
Ch 13 is supposed to be dismissed tmrw. I emailed my atty. I have a medical issue, and was separated from my husband since last Oct. If my husband adds his income into the plan, cant she do a CH 13 plan modification? I dont even have a vehicle to get to the hearing tomorrow, imo this is unfair…..My husband wants to help so we dont lose equity in the house- I am upset and dont know what I can do here—please help
@Marie – it seems to me that if you can get a continuance of your hearing date, perhaps you, your husband and your lawyer can try to come up with something. Obviously it would be helpful if you could attend. Perhaps your lawyer can ask for a reset on the grounds that you have no way to get there. Perhaps your husband can attend. Judges tend to be more sympathetic when a debtor is there. If your case does get dismissed, you should ask your lawyer about refiling by yourself or jointly with your husband. Good luck to you.
How long do you have to be dismissed from chapter 13 before refileing?
I just need to no how long before I can refile.
Me and My Husband has been under chapter 13th for 2 years going on 3 years. We receive a letter the other day stating that we suppose to turn over our income taxe money we had 30 days are our chapter 13th will be dismiss. We didnt have to gave them our income the first 2 years why now and there taking 400 month out my husband check. If the chapter 13th is dismiss do I still pay the trustee and start back paying criedtors too. Just need answers dont know what to do. The two years we been under chapter 13th the mortage company hasnt receive anything.
My chapter 13 was dismissed 3 weeks ago because my chapt 13 plan was not acccepted. Can I still file a chapt 13 modification plan or do I need to refile and start all over again. I am unable to afford a lawyer therefore I am alone in this process. I have gone online to download the paperwork for this chapt. 13. Is there special paper work to refile/chapt 13 modification plan for georgia?
Thanks
V
Jonathan,
we have been in a 100% repayment plan for 51 months, we have fallen behind the last couple of months due to medical reasons and now just found out my wife has breast cancer and will need 9-12 months of treatment. We also just received noticed the trustee has filed a motion to dismiss. There would be no way we could increase our payment or provide a lump sum equal to our past due amount with our circumstances
Since we were on the 100% plan, i am not so worried about the creditors going back to cent one, since we were paying back fully, the only creditor in question would be one car loan we had. Also we gave up our house so we have been leasing ever since. Should we even bother to fight the dismissal or just let it flow through and try and set up payments directly with creditors since a majority has been paid back. Also will car creditors even accept payments or will we for sure loss it. Finally, is there any hardship that we might be eligible for like suspending our 13 or discharging it earlier?
We seemed to have a hard time getting a hold of our lawyers ever since the trustee denied their petition to increase the attorney’s fees on the case, so any help would be greatly appreciated.
@Miles Parker: You should change your filing to a chapter 7 with your attorney.
Jonathan,
I have been in Chapter 13 for two years now. I just recieved a letter from the Bankruptcy court saying they are dismissing my Chapter 13? I never missed a payment. The letter said The Trustee has reviewed the proofs of claim filed in this case, and beleives that the plan is not sufficient to pay all of the claims as filed. As a result, the plan is unfeasible, and the case should be dismissed pursuant to 11 U.S.C. 1307 (c) (1). I don’t understand do I need to refile? I’m am so upset we have been so good trying to get on track with our life….
My dad is 88 years old and filed Chapter 13 about 3 years ago. The only collateral he had was his 2005 dodge caravan. Dad was living with us for the past 4 years and now is in an Independent living facility and can’t pay his BK payment any longer. I drive dad’s van as we are also in Chapter 13 and have no vehicle. I can’t afford dad’s payments along with ours. Dad has a dismiss motion scheduled on 1/12 and I have no money to bring as I had emergency open back surgery on 12/7. How can we go about keeping the vehicle. If this is taken we have no way to work. We have not missed one payment on our BK. Thanks for your help
Jan this might be a case where you could ask the court to grant a “hardship discharge.” If granted, all claims would be deemed satisfied. Speak to your lawyer about this. You might also look into converting to Chapter 7, then arranging financing to redeem the vehicle. Otherwise, you may want to approach the auto lender about a payment plan. Best of luck to you.
Sammy, the letter to received most likely is a motion to dismiss by the trustee as opposed to an actual dismissal . I suspect what has happened here is that the claims in your case came in higher than expected, thereby making the plan run longer than 60 months. This type of problem is not especially unusual and your lawyer should be able to recommend a fix (which might involve an increase to your trustee payment)