25 May What Happens To My Chapter 13 Payment If My Income Goes Down?
In a chapter 13 case, you have to propose a monthly payment to repay your creditors, at least in part. Most chapter 13 payment plans last for either 36 or 60 months. You might think this is a long time to commit to making a monthly payment. Or, you might even wonder if it’s even wise to make such a commitment. After all, your income could go down in the future, leaving you with a payment you can no longer afford. Maybe this means filing chapter 13 isn’t a good idea.
Fortunately, most of the time a chapter 13 payment can be modified if your income is reduced. This is because the law provides that a chapter 13 payment should be based upon your current income — throughout the entire case. When your chapter 13 is filed, the payment is calculated using your income at that time. If your income changes later, the payment can be re-calculated using your new income. This is done by making a motion to the bankruptcy court, supported by documentation of your new income figures.
The legal standards for determining a chapter 13 payment provide for modification of the payment at any time during the case. You simply need to make a motion for modification to accomplish this. Even better, modifying your chapter 13 payment doesn’t extend the length of your case, unless other special factors are present.
This means that you can file a chapter 13 case free from worry that you might be stuck with a payment that seems good now, but that might become unaffordable later. Just remember that if your income goes down during your case, you need to contact your bankruptcy lawyer immediately about modifying the chapter 13 payment.
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Craig Andresen is a Minnesota bankruptcy attorney who represents both consumers and small business owners in chapter 7 and chapter 13 cases. With thirty years experience, Mr. Andresen is a frequent speaker on the topics of stopping mortgage foreclosures, and stripping off second mortgages in chapter 13. His office is located in Bloomington just across the street from the Mall of America. Call his office at (952) 831-1995 for a free consultation about protecting your rights using bankruptcy.
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