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What can I do if I fall behind on payments? An essential requirement of Chapter 13 is that you make payments on the plan, and sometimes to other creditors. This describes what to expect if you miss payments and what options may be available to you.



The Trustee is answerable to your creditors to collect and distribute your plan payments. How closely he monitors your payments depends upon the status of your case:


Before the Trustee's Recommendation

When the Trustee's Recommendation is made

After the plan is confirmed


Payments not made before the Trustee's Recommendation is due.  The Trustee's recommendation is due 90 days after the meeting under 341 which you must attend.  If you have not made payments at that time, the Trustee may dismiss your case without notice to you.  Local Order re: Procedures for Confirmation of Plans, Amended or Modified Plans, Moratoriums and Dismissals.


What to do.  The failure to make any plan payments suggests a lack of good faith in filing the plan, or circumstances which are not consistent with qualifying for Chapter 13.  If exigent circumstances exist, it may be possible to move for a moratorium as described below.  However, the total default makes success unlikely.


Payments missed when the Trustee makes his Recommendation. The Recommendation which the Trustee makes about 90 days after the 341 meeting will ordinarily require that you be current in your plan payments.  Often, but not always, the Trustee will specify any payments are missing.  If your plan payments are not current within 30 days from the date of the Recommendation, the Trustee will lodge an order dismissing your case without further notice.  The requirement to be current in plan payments will include any which become due during the 30 days following the recommendation.


Example: If your plan payments are due on the 15th day of each month, and the Trustee's Recommendation is is made on the 1st, in order to avoid dismissal you must have made all payments due before the Recommendation, plus the payment due on the 15th in the month following the recommendation.


What to do.  Default so early in plan payments are difficult to handle. If there is a reasonable, verifiable basis for the default, it may be possible to ask for an extension of the deadline or file a Motion for a Moratorium in plan payments and an Amended Plan.


Extension of deadline.  If you will be able to bring your payment current, you may ask your attorney to file a request for an extension of the deadline.  The extension is usually granted for only 30 days at which time you will have to have all payments brought current.  There is a small charge for the extension request which you will need to pay at the time that you talk with your attorney.


Moratorium and Amended Plan.  The Moratorium and Amended Plan will have to be noticed to all of your creditors, you will be required to prepare an amended budget (Schedule I - Income and Schedule J - Expenses) with supporting documentation. An Amended Plan was not contemplated in the fee agreement, so additional charges will be incurred. If your plan is 36 months in length, the missed payments may often be added to the end of the plan. If the length of your plan is at or approaching 60 months, the missed payments must be added to the plan, increasing the amount of each plan payment.


Payments missed after the plan is confirmed.  Once the plan is confirmed--after the Trustee's recommendation and a order confirming the plan has been signed by the court--your plan payments are under less immediate scrutiny.  It has been the practice of Arizona Trustees that they take no action until a total of two plan payments have been missed.  When you have missed two payment, the Trustee usually sends out a letter stating that if you do not bring your payments current, a motion will be filed seeking to dismiss your case.  If you do not bring your payments current, the Trustee will file a Motion to Dismiss your case.


What to do.  If you miss plan payments, make them up as soon as you can whether you have received the Trustee's letter or not.  If you cannot make up the payments, you may move to modify your plan to suspend the missed payments.  Because of the cost of the modification, it will be substantially less expensive to make up missed payments. However, once the Trustee files a Motion to Dismiss your case, you must immediately respond or your case will be dismissed and you will lose protection from your creditors.  The Motion to Dismiss page contains information about the Trustee's motion and how Chapter 13 Plans may be  modified.