Texas residents who file a Chapter 13 bankruptcy sometimes wonder what would happen if they run into financial difficulties and are unable to make one of their required monthly payments on time. These payments are generally sent to a designated bankruptcy trustee who then passes the money along to the debtor's creditors, and, in these situations, payments that arrive a few days late will rarely cause many problems. However, it may be wise for debtors to find out when the bankruptcy trustee sends these payments out each month.
In some cases, debtors send installment loan or mortgage payments directly to the creditors concerned, and debtors who are unable to send these payments in on time may wish to contact the recipient to let them know that the money will be late and when to expect it. This is prudent because bankruptcy trustees may sometimes react badly if they are contacted by creditors who have not been paid as agreed under a Chapter 13 plan.
When bankruptcy trustees do not receive the necessary funds to send to creditors, they could go so far as to file a motion to have the Chapter 13 bankruptcy dismissed. Motions of this type can be opposed, but this just means more stress and legal fees for the debtors concerned. Bankruptcy trustees who choose not to file a motion to dismiss could instead take steps to garnish the wages of debtors who persistently make late payments.
Experienced bankruptcy attorneys may explain the procedures involved in a Chapter 13 bankruptcy plan and the possible consequences when required payments are late. Attorneys may also suggest a Chapter 7 bankruptcy filing for those who qualify as this kind of debt relief does not involve a three- to five-year repayment plan.