Why Chapter 13 cases fail and what you can do
Chapter 13 has a significantly higher dismissal rate than Chapter 7 because it requires sustained effort over 3-5 years. Understanding the common pitfalls helps you complete your plan successfully.
Missed plan payments
This is the number one cause of Chapter 13 dismissal. If you miss payments:
- Contact your attorney immediately -- do not wait for a motion to dismiss
- You may be able to cure the default by catching up on payments
- A plan modification may reduce your payment if circumstances have changed
- The court may grant a temporary suspension of payments (moratorium) for genuine hardship
Income changes
Job loss, reduced hours, or medical issues can make your plan infeasible. Options include:
- Plan modification -- Request reduced payments under Section 1329
- Hardship discharge -- In extreme cases, Section 1328(b) allows discharge without completing the plan
- Conversion to Chapter 7 -- If you qualify, converting may allow discharge without further payments
Failure to confirm
If the court will not confirm your plan (perhaps because it does not pay enough to unsecured creditors, or does not pass the means test), work with your attorney to amend the plan. You typically get multiple chances before the court dismisses.
Hardship discharge: Under Section 1328(b), if you cannot complete your plan due to circumstances beyond your control, you have already paid at least as much as creditors would have received in a Chapter 7, and plan modification is not practicable, the court may grant a discharge. This is a high bar but exists for genuine hardship.
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