If you’re working through a Chapter 13 bankruptcy plan in New Jersey and missed a payment, or think you might, you’re not alone. Life can change quickly. A lost job, a medical emergency, or an unexpected expense can affect your ability to make scheduled payments. It happens, even to people who are doing their best to follow the plan.
Missing a Chapter 13 payment does not automatically end your case, but it’s important to act quickly. As a Cherry Hill bankruptcy attorney, I have guided many clients throughout New Jersey and Southeastern Pennsylvania through these stressful situations. At the Law Office of Joel R. Spivack, we understand how overwhelming it can feel when something disrupts your plan, but you may have more options than you think.
Understanding Chapter 13 Bankruptcy in New Jersey
Chapter 13 bankruptcy allows you to repay all or part of your debts through a structured monthly payment plan. Instead of erasing debt all at once like in Chapter 7, you work with the court to develop a plan that typically lasts three to five years. The goal is to help you regain stability while keeping important assets like your home or car.
Each month, you make a payment to a bankruptcy trustee. That payment is based on your income, living expenses, and the type of debt you owe. The trustee distributes the money to your creditors. Since these payments are court-ordered, staying current is essential to preserving your protections under bankruptcy law.
What Happens If You Miss a Chapter 13 Payment?
Missing one payment does not mean your case is dismissed right away. However, a missed payment can lead to serious consequences if it is not resolved quickly.
The Bankruptcy Trustee Is Notified
The trustee assigned to your case monitors your payment schedule. When a payment is missed, the trustee is alerted. Depending on the situation, the trustee may send a letter, contact your attorney, or decide to take formal action.
The Trustee May File a Motion to Dismiss
If the trustee believes your payment plan is no longer feasible, they may file a Motion to Dismiss with the bankruptcy court. This is a formal request to end your case. You will receive a notice if this happens, and you will have a short window of time to respond.
Depending on the circumstances, your case might also be eligible to convert Chapter 13 bankruptcy to a Chapter 7 bankruptcy. Chapter 7 typically involves the sale of non-exempt assets and may have longer-lasting effects on your credit, remaining on your report for up to ten years. It’s a different type of bankruptcy with its own rules and consequences, so it’s important to speak with your attorney about whether it’s the right path for your situation.
The Automatic Stay May Be Lifted
If your case is dismissed, the automatic stay is lifted. That means creditors are no longer prohibited from collecting. Foreclosures, repossessions, wage garnishments, and lawsuits that were paused during your bankruptcy may resume.
What You Can Do After Missing a Payment
If you’ve missed a payment, or if you believe you will, it is important to take action as soon as possible. You may still have options, particularly if you act quickly and with the guidance of your attorney.
Contact Your Bankruptcy Attorney Right Away
Start by reaching out to your bankruptcy attorney. Your lawyer can assess your current situation, explain your options, and contact the trustee or file documents with the court, if needed. In most cases, we can take steps to keep your case from being dismissed. At my office, we take the time to understand what led to the missed payment and work to find the right path forward.
Make Up the Missed Payment If You Can
If your financial difficulty was short-term and you’re now able to catch up, make the payment as soon as possible. In many situations, trustees will allow some flexibility if this is your first missed payment and your plan is otherwise in good standing.
Ask About a Plan Modification
If your income has changed due to job loss, a medical issue, or another life event, it may be possible to file a motion to modify your plan. This can reduce your monthly payments or extend the length of your plan, as long as it stays within the time limits allowed by law.
Consider Requesting a Temporary Suspension
In some cases, courts will allow a temporary suspension of Chapter 13 payments. This option may be available if you’ve experienced a significant and documented hardship, such as a medical emergency or temporary loss of income. This is not guaranteed, and it requires court approval, but it may give you time to recover.
Each situation is different, and outcomes depend on your case details and whether the court and trustee approve any proposed changes.
Frequently Asked Questions
1. How many payments can I miss before my case is dismissed?
There is no set number. Some trustees will file a Motion to Dismiss after a single missed payment. Others may wait if your plan has been in good standing. The most important thing is to act quickly and communicate with your attorney.
2. Will I be notified if the trustee files a Motion to Dismiss?
Yes. You will receive written notice from the bankruptcy court, typically giving you 21-30 days to respond. This window is critical, and ignoring the notice could result in your case being dismissed. In many cases, your attorney can help you take corrective action before the court moves forward.
3. Can I refile Chapter 13 if my case is dismissed?
Often, yes. That said, there may be important limitations. If your case is dismissed and you file again too soon, you may lose some automatic stay protections. It’s crucial to speak with your attorney before deciding to refile so that you understand all of your rights and risks.
Life Happens. Let’s Get You Back on Track
Missing a Chapter 13 bankruptcy payment can feel overwhelming. But it does not necessarily mean your case is over. Life happens, and many people experience temporary setbacks during the course of their repayment plans. What matters most is how you respond and the steps you take to stay protected under the law.
If you have missed a payment, or think you might, the most important thing you can do is talk to a bankruptcy attorney who understands how the process works in New Jersey. It helps to have someone who will take the time to listen, walk you through your options, and guide you without judgment.
Contact the Law Office of Joel R. Spivack Today
I work with individuals and families across South and Central New Jersey, including Camden, Cherry Hill, Trenton, Princeton, Atlantic City, and surrounding communities, as well as throughout the Philadelphia metro area. Whether you’re facing a missed Chapter 13 payment or need help modifying your plan, I’ll meet you where you are and help you move forward.
Call (856) 488‑1200 or fill out our contact form to schedule a confidential consultation today.
Disclaimer: This blog is for informational purposes only and does not constitute legal advice. Every case is different. To receive legal advice specific to your situation, please consult a qualified New Jersey bankruptcy attorney.