Bankruptcy is a legal process that can help people in North Carolina pay off their debts. Typically, the bankruptcy process concludes after three to five years of regular payments. Multiple bankruptcy types exist, including the popular Chapter 13 reorganization bankruptcy. An important part of completing the bankruptcy payments involves making on-time payments. Here’s what happens if you don’t make a payment on time.
First-time missed payments
Nearly everyone misses an occasional payment from time to time. In most cases, creditors are willing to be lenient with someone who rarely makes late payments. However, they become less willing to work with someone who is missing payments continually. If you suspect you’ll miss a payment, contact your North Carolina bankruptcy trustee who oversees your case and explain why your financial situation may have changed.
Modifying your plan
Bankruptcy plan modification is a potential option if a court recognizes you have valid reasons to miss payments. Modifying a bankruptcy plan may include adjusting payment dates or amounts. However, a court must approve any request to modify a Chapter 13 bankruptcy plan.
Changing to Chapter 7
Another option if continual missed payments happen is for the court to change your bankruptcy to a Chapter 7. While that change might sound minimal, a change to a Chapter 7 bankruptcy may permit the liquidation of your nonexempt assets to pay creditors.
Losing your bankruptcy protections
You have protection from creditors as you work toward completing the Chapter 13 bankruptcy process. However, continually missing bankruptcy payments can end this legal arrangement. If that happens, creditors are free to collect debts in any legally fit manner.
Sometimes, it’s impossible to control missing a payment. However, communicating with the appropriate party right away is key to a potentially favorable outcome.