Receiving a letter from the Chapter 13 Trustee, whether it’s Marilyn Marshall, Thomas Hooper, or Glenn Stearns, can be a stressful moment. The ominous header, “Motion to Dismiss,” stares back at you, triggering the realization that your hard work in the bankruptcy case might be at risk.
Why Did the Trustee File a Motion to Dismiss my Chapter 13 Bankruptcy?
Dismissal motions typically stem from specific circumstances. One common ground is unreasonable delay under 11 USC 1307(c). This often occurs when the case confirmation process takes an extended period. Factors contributing to this may include missing a creditors meeting, failure to submit tax returns promptly, or prolonged case proceedings. If you find yourself on the third continued confirmation hearing, the likelihood of facing this motion increases. It’s worth noting that under 11 USC 521(I), failing to submit paystubs and tax returns within 45 days can automatically lead to case dismissal—a matter judges seldom compromise on.
In my opinion, the most common reason for a motion to dismiss is failure to make plan payments. This is straightforward—once you propose a payment amount in your Chapter 13 bankruptcy plan, the payment is due within 30 days of filing, even if the case is not confirmed. Additionally, once your bankruptcy plan has been confirmed your payment is due every month for the entire period of the plan, there are no exceptions without a Court order. Trustee-initiated dismissals for missing payments are very common, emphasizing the importance of sticking to the payment schedule outlined in the Plan.
Lastly, Chapter 13 Trustees may move to dismiss a case due to the failure to submit annual tax returns or surrender tax refunds. Many Chapter 13 Bankruptcy plans mandate turning over any tax refund exceeding $1200 to the Trustee, along with providing copies of the returns. Non-compliance with these requirements could prompt a dismissal motion.
How to Respond to a Chapter 13 Trustee Motion to Dismiss
Regardless of the reason behind the motion, you have a 21-day window to file a response, articulating why the Chapter 13 case should not be dismissed. Possible reasons for response could include trustee errors or instances where your employer deducted plan payments, but the trustee did not receive them.
Addressing Mistakes or Explaining Circumstances
If there was a mistake, your response should highlight it, providing clarity on any discrepancies. Alternatively, if problems occurred due to external factors, like changes in employment or health issues, your explanation should outline these circumstances. Most trustees are open to collaboration if you can offer a reasonable explanation for any payment lapses and demonstrate a plan for future payments.
Alternatives to a Chapter 13 Motion to Dismiss
When discussing potential dismissal with your lawyer, exploring alternative options is prudent:
- Modifying Your Plan: If your income has decreased, you may be eligible to modify your repayment plan, negotiating a lower monthly payment.
- Requesting a Hardship Discharge: Courts may grant hardship discharges if you’ve been in Chapter 13 for an extended period and have already paid unsecured creditors what they would have received in Chapter 7.
- Converting to Chapter 7: If making payments in Chapter 13 becomes unmanageable, conversion to Chapter 7 is an option. However, this involves strict procedures and potential risks like foreclosure, making it crucial to consult with your attorney before pursuing this avenue.
Seeking Professional Assistance
If you’re grappling with challenges from your Chapter 13 Trustee, seeking guidance from an experienced Bankruptcy Attorney is advisable. While some individuals may choose to handle their cases independently, the complexity of Chapter 13 necessitates precision. Consulting with Steven J. Grace can help you navigate the intricacies of your Chapter 13 Bankruptcy Case and ensure you are on the right track.
