Stopping Chapter 13 Bankruptcy Payments

Pursuing a Chapter 13 bankruptcy allows a debtor to pay off creditors through a payment plan designed by the court and the bankruptcy trustee. There are a number of consequences to stopping Chapter 13 bankruptcy payments.

Time Frame

The typical Chapter 13 plan requires a debtor to make monthly payments to the bankruptcy court trustee for a period of two to five years.

Initial Effects

The initial effect of stopping Chapter 13 bankruptcy payments is an admonishment from the trustee, an informal reprimand.

Arrearage

As an arrearage develops over the course of three or more months, the trustee will seek intervention by the bankruptcy court judge. A case can be dismissed at this juncture.

Sanctions

In addition to dismissal of a case because of stopped Chapter 13 payments, a debtor can face monetary sanctions as well.

Prohibition on Future Filing

After a dismissal for stopping payments on a Chapter 13 plan, the court can also prohibit a debtor from refiling a case for a set period of time into the future.

Creditors' Action

After a Chapter 13 case is dismissed for stopped payment, creditors can resume their independent collection activity.

References

• Cornell Law School, Bankruptcy: An Overview
• U.S. Bankruptcy Code, Chapter 13
• U.S. Bankruptcy Courts

Resources

• American Bar Association, Section of Bankruptcy and Insolvency Litigation