12 Apr Chapter 13 Plan Payment May Fluctuate During The Plan
The amount that you pay each month for your Chapter 13 Plan payment may fluctuate during the lifetime of your Plan. It is not uncommon for debtors to believe that once a Plan payment is approved by the Court it will never change again.
This occurs regardless of the number of times that attorneys advise the clients that their payments may change and often the trustees as well as the judges will give this advise. The reason why your Plan payment may change is because your budget is fluid in nature.
Take a bottle of water that is half full with the cap on. Turn it upside down and watch what happens. Then turn it on its side and or lift it at different angles. What you will notice is that the water is in a constant state of change. This is the same thing that happens to your budget each and every month. Sometimes your utility bills may come in higher or the price of gasoline for your car may drop. So these bills are not constant. Or maybe a better example for some who have an adjustable mortgage or interest only loans where the payments fluctuate tremendously during the life of the Chapter 13 Plan.
So if your expenses increase tremendously, for my office we look at a 10% increase for 3 or more months, your budget will need to be reviewed to see if your Plan may be adjusted. The same holds true if your income goes up more than 10% for 3 or more months. If there is an income increase then your budget should be reviewed to see if you are liable to pay more to your creditors. Under section 1329 of the Bankruptcy Code the trustee, the debtor or one of the unsecured creditors can request an order to change the Plan payment anytime during the life of your case.
In addition to the examples listed above the other changes that may adjust your Plan payment could be when you surrender a home or a vehicle. Or in the alternative if you need to purchase a home or vehicle. The examples are endless as to what may affect the monthly amount that you will need to pay for your Plan payment. Although all bankruptcy courts follow one guideline called the Bankruptcy Code, each state and each district within that state enforces the code in a slightly different manner. Therefore you should consult an attorney in your area for questions about Chapter 13 Plan payments or bankruptcy in general.
It is critical that you keep your attorney informed about changes in your income and expenses during the lifetime of your Plan. Ask your attorney for their guidelines of when they want you to update them about your changes.
This article outlines the changes that might occur during the lifetime of your Chapter 13 Plan and not what the initial plan payment determination will be. To understand what your initial Plan payment will be read Bret Weiss’ article.
Remember that knowledge is power and the more knowledge you have about how your Plan payment is determined the more power you have to succeed in your Chapter 13 Bankruptcy.