01 Jul Can My Chapter 13 Plan Be Changed If Something Happens?
A Chapter 13 Bankruptcy last a minimum of 36 months, and more frequently lasts for 60 months.
During that 36 to 60 month time frame, the Debtor will be making monthly payments, known as Plan payments to the Trustee.
So it should not come as a surprise that things can happen that can have an impact on a Debtor’s ability to pay his monthly Plan payments.
Also, in addition to payment issues, other events can happen to the individual during a Chapter 13.
As an example, what happens if a person is paying the secured debt on a vehicle and the vehicle is wrecked or has mechanical problems that make the vehicle of no further value to the individual?
Fortunately, the Bankruptcy Code permits a Chapter 13 Plan to be modified following it’s confirmation if there has been a change in circumstances.
So, if an individual has a reduction in income, they can seek a modification of their Plan to reduce the payment to their creditors.
Likewise, if Debtor has a vehicle that is no longer operational, or he needs to surrender the vehicle for some other reason, then the Plan can be modified to give up the vehicle, even if the vehicle is wrecked.
The debt does not go away, but it is no longer a secured debt and will only get paid to the extent that other unsecured debt will be paid.
It should be noted that the creditors have a right to object to the modification, so the modification of a Plan is not automatic.
Two other instances where a Debtor has an absolute right to modify a Plan is when they need to purchase health insurance or in situations where the individual has been ordered to pay a Domestic Support Obligation post petition.
Modification of a Plan is only one way that a person can address financial changes in a Chapter 13 Bankruptcy.
Contact an experienced attorney to discuss your options.
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