When people in Maryland fall behind on their bills and become overwhelmed by debt, a Chapter 13 bankruptcy begins to look like an attractive option. One of the most appealing aspects of this is that people generally get to keep their assets. Instead of having them seized and sold, they may instead reorganize their debt until they catch up on payments.
However, many people who file Chapter 13 find it difficult to keep up with even reorganized debt payments. So, what then? According to Bankrate, being a week or so late on payments to the trustee might not be a big issue. It might depend on when in the month trustees make payments to creditors. In some cases, they might not notice as long as the payment is made before the end of the month.
If the trustee does notice, some may file for the Chapter 13 bankruptcy case to get dismissed. It is possible to fight this, but it may cost more money in attorney fees. Considering the consequences of losing a Chapter 13 case, however, many people believe the fees are worth it to keep a roof over their heads. Another route trustees may decide to take is to garnish wages to make the payments.
When people realize they cannot keep up with Chapter 13 bankruptcy payments, they may then try to convert it to a Chapter 7 bankruptcy. Bankrate reports that in many instances, people try to do this to save their house. However, the lender may have the right to refuse the new arrangement and just seize the property.
That said, some people who fail to get a loan modification under Chapter 13 then manage to do so under Chapter 7. However, there is no guarantee this will be the case. It may all come down to how a specific creditor may wish to handle the situation. To avoid or reduce risk, it might be better to catch up on payments quickly and stay in line with the Chapter 13 filing, whenever possible.
