Running on Empty: “What If I Can’t Make My Chapter 13 Payments?”...


Chapter 13 bankruptcy is about payments. After all, it’s a “payment plan bankruptcy.”  But what if you just can’t make the payments?Chapter 13

A moratori…what?

A motion for moratorium of payments is a motion you can file to suspend your plan payments for a period of time.

Practice from bankruptcy district to bankruptcy district is very different, so I’m writing from my perspective here in the Palmetto State–South Carolina.  (“Palmetto” is a type of palm tree prevalent here with an interesting history, which has absolutely nothing to do with the subject at hand, so I’ll resist the urge to digress. If you’re bored already, then click on the words “interesting history” and you’ll read, well, some interesting history.)

Here in South Carolina, for good cause–something other than “I just don’t think I will have the money to make my plan payments”– we obtain orders suspending payments for up to three months. Use only one or two months if you need it, because you never know when you’ll need another order.

Tell your lawyer if you’ll have problems making your plan payments

Going on maternity leave? Getting laid off for a few weeks? Having surgery? These are all income interrupters. If you’ll be experiencing an income interrupter, let your bankruptcy lawyer know ahead of time. He’ll then be able to file your motion with the (hopefully) legitimate reasons you have to suspend your payments.

Your creditors and the bankruptcy trustee have the right to object to the motion, but usually (let’s say almost always) the only person you need to “sell” your cause to is the trustee.

But my trustee’s a real jerk!

My official position is that there are no Chapter 13 trustees who are real jerks. None. Unofficially, let’s say you really do have a jerk for a trustee. Keep in mind that even if the trustee objects, you have the right to be heard by the judge. And the likelihood of your bankruptcy judge and your bankruptcy trustee being a jerk is pretty slim, statistically speaking.  If you really do have some legitimate reason to suspend your payments–through no fault of your own–the judge will grant your motion.

Don’t keep your attorney in the dark

With any problems in any type of bankruptcy, let your attorney know immediately so that she can take necessary steps to keep your case on track.