Chapter 13 Plan In Bankruptcy Can Be Modified

It is basically true that a chapter 13 plan typically will have a monthly dollar amount which will last for the duration of the case. However, there are certain circumstances were a chapter 13 plan in bankruptcy can be modified. One such case would be where the debtor has fallen behind on his monthly plan payments and the trustee has brought a motion to dismiss. Depending upon how much room is available during the 60 month plan, the arrearage portion can be moved to the end of the plan in certain circumstances.

In a recent case, I’m dealing with a debtor who has been struggling with his chapter 13 plan payments for the past two and half years. He has gone through several job changes, medical emergencies and most recently a death in the family. He has found himself unable to pay the $750 monthly plan payment. To make matters worse, the chapter 13 trustee has brought a motion to dismiss which will be heard in the upcoming month. The debtor called my office wondering what can be done in this case because he really does not want to have to refile and start from scratch. Luckily for him, there is a remedy.

What I propose is that we bring a motion to defer the default and increase the plan payment. The default of nearly $2500 can be moved to the back of the chapter 13 plan. In addition, we can increase the plan payment by approximately $75 per month which would provide for payment of all claims within the 60 month time period. The debtor has recently switched jobs and is currently making more income per month then at the time we filed the chapter 13. This will allow for the debtor to make that increased plan payment without an issue.

So the bottom line is that chapter 13 is a structured repayment plan with the specific dollar amount over a specific period of months. However, the plan can be amended and increased or decreased depending upon the financial circumstances of the debtor. In this situation, we were facing a trustee’s motion to dismiss so we had to defer the default and amend the plan payment to a higher amount for future months. Keep in mind that the plan cannot exceed 60 months. Thus, the only way to keep the case going was to increase the plan by approximately $85 per month.

If you have chapter 13 issues and you need legal assistance, you can contact my office at 847-520-8100. I will offer you a complimentary, no obligation consultation to see if my services can be of value to you.  We often can substitute into your case if you were pro se or if you were not satisfied with your prior counsel.

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