The First Thing to Do: Call Your Bankruptcy AttorneyBefore anything else, contact your bankruptcy attorney. This is not a situation to handle alone or to delay. Your attorney knows your case, knows your trustee, and knows what options are realistically available given where you are in your plan. Many problems that feel catastrophic from the outside have practical solutions your attorney has navigated before.
If you do not currently have an attorney — or if you filed your Chapter 13 without one — the urgency is even higher. The bankruptcy trustee’s office will not negotiate on your behalf, and the court will not pause your case simply because you are going through a hard time. You need someone in your corner who understands the procedural requirements and deadlines involved.
For most people who hit a financial rough patch during a Chapter 13, a plan modification to reduce the payment is the first option to explore. Under 11 U.S.C. § 1329, the debtor, the trustee, or an unsecured creditor may propose a modification to a confirmed Chapter 13 plan at any time before the plan is completed.
A modification can accomplish several things depending on your situation:
A modified plan must still satisfy the same legal requirements as the original confirmed plan — including the good faith requirement and the disposable income test under 11 U.S.C. § 1325. That means a modification is not guaranteed, and the trustee or a creditor may object. But for a debtor who has experienced a genuine and documentable change in circumstances — a job loss, a medical setback, a reduction in hours — a modification is often a realistic path forward.
If you lost your job while in Chapter 13, this option deserves serious attention before you consider more drastic steps.
If your financial situation has changed significantly enough that a repayment plan is no longer feasible — not just temporarily difficult, but genuinely unworkable — you may be able to convert your Chapter 13 to a Chapter 7 under 11 U.S.C. § 1307(d).
Chapter 7 does not require ongoing monthly payments. Instead, it typically results in a discharge of most unsecured debts within four to six months. For someone whose income has dropped substantially, Chapter 7 may accomplish the debt relief they originally sought from Chapter 13 — just through a different path.
There are important considerations before converting:
In narrow circumstances, a debtor who cannot complete a Chapter 13 plan may qualify for a hardship discharge under 11 U.S.C. § 1328(b). To qualify, three conditions must be met:
This is a high bar. A hardship discharge does not cover all the same debts that a completed Chapter 13 plan would discharge — it is closer in scope to a Chapter 7 discharge. And the second requirement — that creditors have already received what they would have gotten in Chapter 7 — means this option is generally not available early in a plan when little has been paid in.
A hardship discharge is worth discussing with your attorney if you are well into your plan and have suffered a serious, involuntary change in circumstances such as a disabling illness or injury.
Under 11 U.S.C. § 1307(b), a Chapter 13 debtor generally has the right to voluntarily dismiss their case at any time. But this option comes with significant consequences that must be understood clearly before choosing it.
When your Chapter 13 case is dismissed, the automatic stay is lifted immediately. Every creditor who was paused by your bankruptcy filing — mortgage servicers, car lenders, credit card collectors, medical billing departments — regains the right to pursue collection, initiate foreclosure, repossess vehicles, or file lawsuits. The consequences of dismissal can move quickly, particularly if you were behind on a mortgage and using Chapter 13 to catch up on arrears.
Re-filing warning: If you dismiss your Chapter 13 case and need to file bankruptcy again within one year, the automatic stay in your new case may be severely limited. Under 11 U.S.C. § 362(c)(3), the stay in a second case filed within one year of a prior dismissal automatically terminates after 30 days unless the court orders otherwise. If you have had two or more cases dismissed within the past year, the automatic stay may not apply at all under § 362(c)(4). This is one of the most important reasons to exhaust every other option — modification, conversion, hardship discharge — before voluntarily dismissing. Speak with your attorney about this specifically before making any decision.
Voluntary dismissal may make sense in limited situations — for example, if your circumstances have improved enough that you no longer need bankruptcy protection, or if you are planning an immediate re-file under Chapter 7 and the stay limitations would not affect you significantly. But it should never be a default choice made under panic.
If you miss plan payments and take no action, the trustee or a creditor will eventually file a motion to dismiss your case under 11 U.S.C. § 1307(c). The specific threshold varies by district and by trustee practice — some trustees move quickly after two or three missed payments, others may allow more time. But a pattern of non-payment will result in a motion.
Once a motion to dismiss is filed, you typically have an opportunity to respond — either by catching up on the arrears, proposing a plan modification, or converting to Chapter 7. But that window is limited, and by the time the motion is filed, your options may be narrower than they would have been had you acted proactively.
An involuntary dismissal carries the same re-filing consequences as a voluntary one. And unlike a voluntary dismissal, you do not control the timing — which can matter enormously if a foreclosure sale or repossession is imminent.
Yes, in many cases. If you have missed one or a few payments but your financial situation has stabilized, your attorney may be able to work with the trustee to bring the plan current and avoid dismissal. This typically requires paying the missed amounts within a reasonable timeframe, often in a lump sum or through temporarily higher payments.
The feasibility of catching up depends on how many payments have been missed, how far you are into your plan, and whether the trustee has already filed a motion. The sooner you address the situation, the more options you have.
The Chapter 13 trustee’s office administers your plan and distributes payments to creditors. They are not your adversary, but they are also not your advocate. Their job is to ensure the plan is being funded and creditors are being paid as agreed. If you are represented by an attorney, communications with the trustee should generally go through your attorney. If you are not represented, the trustee’s office can tell you what has been received and what is overdue — but they cannot give you legal advice.
If you are struggling with your Chapter 13 payment, the time to call is now — not after a motion to dismiss has been filed, and not after the trustee has already acted. The earlier you reach out, the more options are on the table.
At Duncan Law, we help clients throughout Greensboro, Winston-Salem, High Point, Charlotte, and surrounding areas of North Carolina navigate exactly these situations. If you are a current client, call your attorney directly. If you are not yet working with us and need help, contact Duncan Law to schedule a consultation.
Not automatically. A single missed payment is unlikely to result in immediate dismissal, but it will put your plan in arrears. The trustee monitors payments closely, and a pattern of missed payments can lead to a motion to dismiss. Contacting your attorney after missing even one payment is the right move.
There is no fixed number that applies in every case. It depends on your district, your trustee’s practice, and the specific facts of your situation. Some trustees act after two or three missed payments; others may allow more time. Do not assume you have a set number of “free” missed payments — the safest approach is to address the problem as soon as it arises.
There is no automatic pause available. However, your attorney may be able to negotiate a brief informal deferral with the trustee in some districts, or file a plan modification that addresses a temporary hardship. This depends heavily on local practice and your specific circumstances.
A job loss is one of the most common reasons people seek a plan modification in Chapter 13. If your income has dropped, your attorney can file a motion to modify the plan to reflect your new disposable income. If the drop is severe enough that no plan is feasible, conversion to Chapter 7 may be an option.
Possibly. Chapter 7 eligibility at conversion is based on your current income, not your income when you originally filed Chapter 13. If your income has dropped significantly since you filed, you may now qualify for Chapter 7 even if you did not before. Your attorney can run the means test based on your current figures.
If you were using Chapter 13 to catch up on mortgage arrears, dismissal of your case removes that protection. The automatic stay lifts immediately, and your mortgage servicer may resume or initiate foreclosure proceedings. If keeping your home was a primary reason for filing Chapter 13, a dismissal could put it at serious risk. This is one of the strongest reasons to pursue modification or conversion rather than dismissal.
A hardship discharge under 11 U.S.C. § 1328(b) is a limited discharge available to debtors who cannot complete their plan due to circumstances beyond their control, provided unsecured creditors have already received at least as much as they would have in Chapter 7. It is a narrow option, typically available only to debtors who are well into their plans and have experienced a serious, involuntary hardship such as a disabling illness. Speak with your attorney about whether your situation meets the standard.
Maybe, but it may be severely limited. Under 11 U.S.C. § 362(c)(3), if you file a new case within one year of a prior dismissal, the automatic stay in the new case terminates automatically after 30 days unless you file a motion and the court extends it. If you have had two or more dismissals within the past year, the stay may not apply at all. This is a critical consideration before voluntarily dismissing your case.
While your Chapter 13 case is active, tax refunds may already be required to be turned over to the trustee depending on your plan and your district’s practice. Missing plan payments does not change this obligation. If your case is dismissed, the trustee’s authority over your assets ends, but any refunds already received by the trustee during the case are generally not returned.
No. Pay what you can for as long as you can, and contact your attorney immediately to explore your options. Stopping payments without any action accelerates the timeline toward a trustee motion to dismiss and narrows your options. Even a partial payment demonstrates good faith and may be relevant to a later modification request.
This article is for general informational purposes only and is not legal advice. Reading this article does not create an attorney-client relationship with Duncan Law. Bankruptcy laws can be complicated, and how the law applies depends on the facts of your situation. If you have questions about your specific circumstances, you should speak with a qualified bankruptcy attorney.
