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I can’t make my Chapter 13 Plan Payments! Can I reduce my payments?

When you file a Chapter 13 Bankruptcy you must remain on a repayment plan for at least 3 to 5 years in order to receive a discharge. However, life happens and the repayment plan payments may become impossible to keep up with. If this happens, you might be able to apply for a modification.

Because a Chapter 13 Bankruptcy lasts for such a long period of time, it is natural that a debtor’s life will go through changes during the duration of the plan. Things can happen such as a job loss, illness, or an unexpected emergency that can have an affect on a debtor’s ability to make their payments. If you find yourself in this situation, you may be able to petition the bankruptcy court for a modification of your monthly payments.

When a debtor begins the bankruptcy process, he or she files with the court and provides to the Trustee lots of information that help you, the Court, and the Trustee figure out your Chapter 13 Plan. Among these documents is your proposed Chapter 13 Plan. Prior to confirmation, your proposed plan is essentially in a temporary probationary period until the Court, the Trustee, and your creditors have a chance to review, or reject to the proposed plan.   If no one objects, or the objections are resolved, then the court will finalize the plan. This is known as confirmation.

Depending on the jurisdiction and the case, it can be anywhere from a couple of months to over a year before your bankruptcy plan is confirmed. If the debtor’s circumstances change during this time, he or she can usually explain the situation to the Court, the Trustee and their creditors and simply file an amended plan with the court. If all of the parties agree, then the court will confirm the amended plan.

Modification after confirmation can be a trickier process. The debtor will need to draft and file a motion with the Court, which asks the Court to modify your plan in order to make your payments more affordable. The Court and the Trustee will ask the debtor to explain why their payment plan should be modified and will ask the debtor to provide evidence of the changed circumstances. If the evidence presented satisfies the court, the Court can then order the remainder of the payments to be lowered for the duration of the plan.

There are some instances in which your plan payments cannot be modified. Certain debts must be paid through your Chapter 13 Plan. These debts include certain taxes, domestic support obligations, and mortgages held on properties the debtor wishes to keep. If your payment plan is only large enough to pay off required debts then the debtor may not be able to reduce the payments without relinquishing property. If the previous plan paid a percentage to the unsecured non-priority debtors, like credit card companies, then the debtor might be able to reduce their payments.

For more information on how to modify you Chapter 13 plan payments contact our office today.


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