What is strict compliance in a Chapter 13 bankruptcy? | Jeff Kelly
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July 9, 2020 / Jeffrey Kelly

Strict compliance in a Chapter 13 bankruptcy is when your case has been placed on a period where if you miss a single Chapter 13 payment, your case is automatically dismissed without a hearing.  Dismissed without a hearing is a bad thing because you have no time to prepare.  The second your case is dismissed, the creditors are free to legally take action against you as soon as the law allows.  Thus, a car creditor can immediately take your vehicle.  

Contrast a Chapter 13 on strict compliance versus a case where strict compliance does not exist.

Normally, when a Chapter 13 debtor falls behind on payments to the trustee, a hearing is set down with the bankruptcy court which gives them time to come up with a plan to make up for missed payments.  Or in the alternative, if you know your Chapter 13 bankruptcy case is about to dismiss, you could make plans for alternative transportation for when your car gets repossessed.  In contrast, if the case is on strict compliance, the Chapter 13 bankruptcy case will be dismissed shortly after a payment is missed.   All bankruptcy protection is lost as soon as the dismissal order is entered.   

Thank you Lord for gracious Chapter 13 trustees.

During this Covid-19 crisis, the Chapter 13 trustees have been extremely gracious by not enforcing strict compliance orders.  Now that we are months into this crisis and people are going back to work, most trustees have resumed enforcing strict compliance orders. 

How does someone end up on strict compliance?

In some cases, the debtor and the debtor’s attorney may agree with the trustee for a requested period of strict compliance.  For example, most Chapter 13 cases have an employment deduction order where the Chapter 13 payment is automatically taken out of the debtor’s paycheck.  However, in some cases, like where the debtor is a supervisor, the debtor may request that no employment deduction order be filed in their specific case because doing so might hurt promotion opportunities.  In most cases like this, the trustee will request a period of one year of strict compliance.

Another situation where strict compliance could be added to a Chapter 13 is after a Motion to Dismiss the case.  In some cases, debtor’s miss work for extended periods.  The most recent example of this is the Covid 19 mess.  Other times, it could be time off work due to surgery or some other health related reason.   In cases where a debtor falls behind on trustee payments and a motion to dismiss is filed, a trustee may require a condition of strict compliance to be imposed as a condition of any deal that may be worked out at the court hearing to continue the bankruptcy case.  


If you think your case has been placed on strict compliance and you have missed some recent payments, please call our office immediately.  Don’t wait for the dismissal order to come in the mail.  It is much better to address potential problems ahead of time.