Yes, Virginia, you CAN change your Chapter 13 bankruptcy payment if something changes in your situation.
Chapter 13 requires a monthly payment from three to five years. It allow you to cure arrearages for mortgages, car loans, taxes, or family support, or pay what you are required to pay under the Means Test. A portion of the money may go to general creditors, like credit cards.
There’s a common fear that those payment is written in stone for the full length of your case. That’s just not true.
Any decrease in income or increase in expenses can support a modified or amended plan where you pay less. Lower income could result from a cut in pay or change of jobs, or increased costs for work benefits such as health insurance. Increased expenses might result from car maintenance for a car as it gets older, or raising a child as the child gets older, or a medical condition or simply an increase in medical co-payments.
If you need to pay a fixed amount to cure a certain arrears, then perhaps you can pay less for a longer time up to the five year maximum and achieve that cure.
The payment can end entirely with a Chapter 13 hardship discharge or conversion to Chapter 7, but you do not get the benefit of curing a loan’s arrears if the cure is not completely paid.
Some jurisdictions allow a suspension of the payment in the event of a short term problem, like changing jobs or moving or a sudden and large medical or repair expense. Under a suspension, the total of all payments does not change and the extended payments can never exceed the five year maximum.
Here’s my point. You file a Chapter 13 case for whatever the reason is. Don’t be afraid of being stuck with the original payment. The payment can change if your situation changes.
Jed Berliner is a Massachusetts bankruptcy and foreclosure defense attorney.
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Last modified: May 7, 2014