While there are many options available to individuals whose situation changes during the course of a Chapter 13 bankruptcy, if you fail to make the court-ordered payments on time, your Chapter 13 bankruptcy gets dismissed. When your Chapter 13 Houston bankruptcy gets dismissed, it may actually be in your best interest if you can’t afford the Chapter 13 payments. You may also have the possibility to lower your payments or convert to a Chapter 7 bankruptcy, or you may have to take the dismissal and wait for your financial situation to improve and make a second attempt at filing Chapter 13 bankruptcy later.
When completing the Chapter 13 bankruptcy process, your credit scores and financial outlook in general tend to improve. Failing to meet the repayment plan requirements robs you of this reward for the sacrifice, planning, and sheer will power that it takes to complete the Chapter 13 bankruptcy process. Furthermore, when your Chapter 13 bankruptcy gets dismissed, your debts do not get discharged, or in other words, you have a bankruptcy on your credit report along with all the debt you were attempting to discharge.
How to prevent a Chapter 13 from getting dismissed
“The best laid plans of mice and men often go awry definition”. While it may not have been Chapter 13 bankruptcy that Author Robert Burns was talking about, things don’t always go according to plan in a Chapter 13 bankruptcy. The real way to keep from getting your Chapter 13 bankruptcy dismissed is to communicate with your bankruptcy attorney and/or bankruptcy trustee as soon as changes in your financial situation occur. For example, if you were to no longer be able to work, got laid off, or received a pay reduction, you may be able to consider a Chapter 7 bankruptcy conversion. By converting your bankruptcy you still have to qualify by passing a means test, however, this may mean that you can choose to have all your assets liquidated, and the remainder of your debt discharged.
Remember, filing for bankruptcy isn’t the end of the world, it’s the start of a new one! By staying calm and identifying financial based stressed, you’ll be able to make better financial decisions. Even if your chapter 13 bankruptcy gets dismissed, you can always apply for a hardship discharge and/or try for another Chapter 13 or Chapter 7 at a later date. But by making sure you pay the trustee payments every month, you won’t only come out more fiscally disciplined, but your credit score and financial outlook will be able to start to improve again as well.