What Happens If You Miss a Chapter 13 Payment in Maryland?

A Chapter 13 bankruptcy in Maryland rests on the premise that you’ll devote disposable income to creditors for three to five years. The trustee collects those funds and distributes them according to your court-approved plan (11 U.S.C. § 1327). When an installment is late, two problems arise: cash flow for creditors is disrupted, and the trustee must report the default to the court. Because the code requires “substantial” plan compliance for discharge (11 U.S.C. § 1328), punctual remittances are the lifeblood of your case.

The trustee’s office often gives filers a short grace period—typically ten to fifteen days—to cure a delinquency. Acting within that window keeps the default off the court’s docket, sparing you extra fees and a potential dismissal motion. Below is a look at what unfolds when a single Chapter 13 payment goes unpaid in Maryland. So, act before a late fee becomes a dismissal – book a strategy call with our top-rated Maryland Chapter 13 bankruptcy attorney.

The Trustee Flags Your Plan as Delinquent and Mails an Early Warning

The Chapter 13 trustee in the District of Maryland receives each plan payment. If the due date passes with no deposit, the account is flagged “past-due,” and—pursuant to Local Bankruptcy Rule 3070-1—the trustee mails a written Notice of Default to you and your Chapter 13 counsel. That letter itemizes the exact shortfall and sets a cure deadline, typically ten to fifteen days from the notice date. 

Although the Bankruptcy Code does not require the trustee to allow this grace period, Maryland trustees do so because quick cures keep money flowing to creditors and reduce court congestion. Remit the overdue amount within that window and the account returns to “current,” closing the matter quietly. 

If you let the deadline lapse and the shortage stays red-flagged; every new payment is applied to the oldest missed installment first, so you remain a month behind until a full cure or plan modification is filed. Early communication with a Chapter 13 bankruptcy attorney can turn that first notice into the last hurdle you face.

A Formal Motion to Dismiss Appears on the Court’s Docket

Thirty days after the trustee’s written notice, Local Rule 3070-1 obliges the trustee to move for dismissal under 11 U.S.C. § 1307(c) if nothing has been posted. The motion is electronically filed, stamped with a hearing date, and mailed to all parties in interest. That filing triggers a new layer of urgency because court costs and attorney time begin accruing immediately. 

To keep the case open, you must either pay the entire delinquency before the hearing or file a written objection proposing a realistic repayment schedule. Judges in the District of Maryland want evidence the shortfall is temporary; budget worksheets and updated pay stubs are key exhibits. Without this evidence, many dismissal motions are granted on the first call of the docket, often within forty-five days of the missed payment. 

Once the order is signed, your Chapter 13 bankruptcy in Maryland ends, and the next domino falls quickly. Chambers Law routinely drafts timely objections that secure additional breathing room, so do not wait for the clerk’s postcard to arrive in the mail.

The Automatic Stay Begins to Lose Its Protective Grip

While the stay technically remains in place until the judge signs a dismissal order, creditors interpret the pending motion as a signal to act. Secured lenders—especially auto-finance companies—file motions for relief from stay, arguing that your delinquent plan undermines adequate protection for their collateral. 

Maryland judges granted 68 percent of such requests in 2024. Each granted motion produces its own order, allowing repossession or foreclosure to resume even before the overall case is dismissed. Credit reporting agencies then log the new activity, dropping your score just when you hoped to rebuild. For debtors catching up mortgage arrears through Chapter 13, this erosion of stay protection can restart foreclosure timelines that had been paused for months. A prompt plan modification restores full insulation, but time is critical once stay relief is on the docket.

Mortgage and Vehicle Loans Slide Back Into Default Status

Your Chapter 13 payment plan often serves as the legal mechanism curing past-due mortgage or car payments. The moment a trustee installment is missed, those underlying loans fall out of the protective arrangement. Mortgage servicers can tack new late fees onto your balance the very next month, even if the case is still nominally active. Auto lenders may accelerate the loan, declaring the entire balance due at once. 

Maryland’s Chapter 13 homestead exemption— $27,900 (Md. Code Ann., Cts. & Jud. Proc. § 11-504(f), which adopts the updated federal amount in 11 U.S.C. § 522(d)(1))—protects equity in your home. Vehicle equity has its own statutory exemption. However, a lender that obtains an order terminating the automatic stay may repossess and auction the car within days. Because many families rely on that transportation to generate the income that funds their plan, a single skipped trustee payment can snowball into job loss and deeper insolvency. 

Creditors Regain the Right to Sue, Garnish, and Levy

Once dismissal takes effect, every creditor returns to its pre-bankruptcy position. Collection departments mail demand letters asserting the full unpaid balance plus interest that accrued during your case. Credit-card companies often file district-court lawsuits in as little as two weeks after stay termination; judgments then lead to wage garnishments or bank levies under Md. Rules 2-645 and 2-646. 

State and federal taxing authorities resume offsets against refunds and may record property liens without further notice. Medical providers send unpaid bills to third-party collectors, which in some states may add new derogatory marks to your credit profile. According to a U.S. Government Accountability Office review of debtor experiences under the Bankruptcy Reform Act, 78 percent of Chapter 13 filers who were warned of impending lawsuits or garnishments by creditors said those collection threats strongly influenced their decision to seek bankruptcy protection.  Quick reinstatement or a successful plan modification can halt this avalanche, but delay gives every creditor free rein.

Prior Payments Can Vanish Into Administrative Expenses

The Chapter 13 trustee must deduct the statutory commission (up to 10 percent under 28 U.S.C. § 586(e)) and any court-approved attorney’s fees from the funds held in your case. After those administrative expenses are paid, whatever money remains is ordinarily refunded to you—unless the judge enters a different order. If your plan was never confirmed, or the balance is small, unsecured creditors may receive nothing at all. 

Debtors who have made payments for a year may find that thousands of dollars are absorbed by trustee and attorney fees, with little applied to the principal debt. Because the trustee’s percentage fee rises with every dollar that flows through the plan, keeping an unworkable case open can waste resources that might have cured critical secured debts instead. A seasoned Chapter 13 bankruptcy lawyer in Maryland can help you decide whether catching up or converting to Chapter 7 will save more money in the long run.

Missed a Chapter 13 Payment in Maryland? Hire a Chapter 13 Attorney Now

Missing an installment triggers a series of clear steps: trustee warning, motion to dismiss, erosion of the stay, and creditor resurgence. Each stage brings escalating costs and risks, yet none is irreversible until the court enters a dismissal order. Chambers Law brings veteran-owned tenacity, flat-fee transparency, and proven strategy to every Maryland case—contact us today to restore your plan, keep your assets, and finish the journey to lasting debt relief.