I just got off the phone from a client that had a Motion to Dismiss filed by her Chapter 13 Trustee, for not paying her chapter 13 plan payments. She lost her job, and has started drawing unemployment. And she was very worried about having her Chapter 13 case dismissed! When this happens, of course consult your attorney.

In some cases, if it's doubtful that you will be re-employed soon, it may be a good strategy to let your case be dismissed, and consider filing a new case later, when you are employed again. It is possible to file bankruptcy more than once. There are certain limitations to this, but an experienced bankruptcy attorney (such as we have at our firm!) can explain the limitations and if allowing your case to be dismissed, and re-filing later, may be the best option for you.

But in many cases, it's best to at least pay the Trustee partial payments, to show that you are trying. In this lady's case, she thinks she can catch up the payments with her tax refund.

And with this Chapter 13 Trustee that we have, I also called his office just to bring them up to date, and they said that if the debtor will pay at least partial payments to show good intent, they will recommend that the dismissal motion at least be continued to a later date, to let her finish catching up her payments with her tax refund.

Or, if that doesn't work out, when the debtor gets re-employed, we could file a Motion to Modify Plan, to propose a change to the Chapter 13 plan to catch up the payments.

The only problem with that is, it sometimes results in having to increase the amount of the payments, and many debtors don't want that. Yet another option if you are served with a Chapter 13 Trustee Motion to Dismiss is to convert your case to Chapter 7. But if you do that, and you were using the Chapter 13 plan to catch up a house, and the payments are not caught up yet, you could lose the house. There is no "plan" in Chapter 7 to catch up house payments, like there is in Chapter 13.

The same with a vehicle, or anything else that you were paying through your Chapter 13; if you convert your case to Chapter 7, you could lose the property. Or for other reasons, you may not want to convert to Chapter 7, ask your attorney. A final way of dealing with a Chapter 13 trustee motion to dismiss is to ask for a hardship discharge, but it has the same effect as filing Chapter 7; it doesn't help you keep property.

2 Comments
I don't know anything about your case, and if you have an attorney you should consult with them about your specific case. However here in the Houston, Texas area we have clients total their car from time to time. It is possible to get a letter from the trustee authorizing you to incur debt to purchase a car. And the remaining "unsecured deficiency" may be dischargeable in chapter 13 along with your other debts. Consult your attorney, but I would hate to see you have to dismiss your case, unless it is really necessary.
by J. Thomas Black December 28, 2016 at 06:09 PM
I filed a Ch 13 to keep my car. I totaled my car and the insurance is cutting a check to my lienholder, however, I will still owe $6k. Will I be able to have my case dismissed so I can try to get another car?
by Tara Batiste December 24, 2016 at 10:52 PM
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