The first part of the analysis is why are we here? What is it about the Plan that the Debtor cannot adhere to, or what about the Plan does not get the Debtor to where they want to go?
The most common case.
To be frank, no one loses property because they file bankruptcy. People lose property because they cannot afford the property. Chapter 13 imposes an additional burden on people because, in most cases, they have to make their regular mortgage payment while paying an additional amount to the Chapter 13 Trustee to make up for (cure) arrears. If you just cannot afford to make the payments maybe the property should be surrendered.
The Unsecured Dividend
If the case is threatened with dismissal because the payments are not enough to pay the propesed dividend to the unsecured creditor then maybe the dividend can be lowered (modified) or perhaps the dividend is already at zero or 1%. In that case dismissing the current Pan and filing a new case will give the Debtor a new 60 month time period in which to pay the arrears and the small sum to the unsecured creditors?
Perhaps the most frequent reason for missing payments is because the Debtor had unanticipated expenses or lost their job for a period of time. Reductions in income, so that the Debtor cannot make their payments, are very common. Whether to allow the case to be dismissed must be reviewed with counsel.
Why stay in the Plan when I can convert to Chapter 7?
The answer to this question depends on what the Pan is repaying. If the mortgage arrears have been satisfied and there are no other issues you may be able to convert rather then dismiss. However, assume a car is being paid through the Plan and is being "crammed down". If you do not get a chapter 13 discharge you ill still owe the full amount of the loan on the car, and if you want to keep it you are very much in arrears.
What should I do?
Dismissing (which you can do on your own at any time) converting or modifying your plan and very difficult choices that must be reviewed at the time the decision is before you. Make sure you review the decision with your attorney in depth.
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