Grounds For Dismissal?

[kornellred]

I am three years into my Chapter 13 plan, with two more to go. I pay my car loan outside the plan. If I were to stop making payments on my car loan, how likely would the trustee be to file for dismissal?

[LadyInTheRed]

I think it is pretty likely that the trustee will move for dismissal if you stop making the car payments. We all are in the habit of saying we are paying secured debt "outside of the plan". But, that payment is actually part of the plan, you are just paying it directly to the creditor instead of through the trustee. Failing to make a payment under the plan is cause for dismissal.

From bankruptcy code section 1307:

(c) Except as provided in subsection (e) [1] of this section, on request of a party in interest or the United States trustee and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause, including—
[snip]
(6) material default by the debtor with respect to a term of a confirmed plan;

I think the failure to pay your car loan is a material default of a term of your plan. If you want to stop making payments on the car loan, you need to modify your plan.

[CCB35]

not only is failing to make car payments grounds for dismissal,not carrying full coverage insurance on the vehicle or vehicles also could cause dismissal

[kornellred]

Thanks for that reminder, LadyInTheRed - my car payment is indeed part of the confirmed plan. I just checked my case data and noticed that my car loan creditor filed a claim as well as all of the unsecured creditors.
Looks like I will have to convert to a Chapter 7.

[RunningMan]

Can't you have your attorney ammend the plan and surrender the vehicle?