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What to Do if the Bankruptcy Trustee Tries to Dismiss Your Chapter 13 Case

The core benefit of Chapter 13 bankruptcy is that it restructures your unsecured debt into a three- to five-year repayment plan. However, you have an obligation to make those payments on time, every time. If you fall behind, the trustee in charge of your case could file a motion to dismiss if. If you are in that situation, you need to take action, with the help of a qualified California bankruptcy lawyer.

Nonpayment is the most common reason for a trustee’s motion to dismiss, but there are other possible causes, such as:

  • Failing to adhere to deadlines
  • Failing to provide the trustee with documents they requested
  • Not filing tax returns every year
  • Not providing the trustee with a copy of your tax returns

Whatever the reason for the motion, you have 21 days to file a response, stating the reasons why the Chapter 13 case should not be dismissed. For example, the trustee may have made a mistake in some way. Or perhaps your employer deducted your plan payment from your paycheck but the trustee didn’t receive it.

If there was no mistake, then your response will need to explain why the problems occurred how you intend to correct them. Perhaps you missed a payment or two because you recently changed jobs and it took a while to receive your first paycheck. Maybe you suffered an injury or illness that caused you to miss work for a period of time but now you are working again. If you can provide a good reason for the lapse and explain how you’ll be able to make future payments, most trustees will work with you to keep your Chapter 13 plan alive.

When discussing a potential dismissal with your lawyer, you may want to consider these other options:

  • Modifying your plan — If your income has been reduced, you may be allowed to modify your repayment plan to work out a lower monthly payment.
  • Asking for a hardship discharge — Courts sometimes grant hardship discharges if you’ve been in Chapter 13 for a while and have already paid unsecured creditors what they would have received had you filed Chapter 7.
  • Converting to Chapter 7 — If you simply can’t afford to make payments in Chapter 13 anymore, you may be able to convert the case to Chapter 7. This involves strict procedures and carries risks like foreclosure, so speak with your attorney before pursuing this option.

If you have been served with a trustee’s motion to dismiss your Chapter 13 case or you believe you may be at risk of dismissal, reach out to the Law Offices of Michael Jay Berger in Beverly Hills at {PHONE} or online for a free consultation. We have decades of experience helping California clients achieve debt relief through bankruptcy.

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