Chapter 13 Plan Modifications

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The only thing that is certain is change. Your income and expenses increase and decrease all the time. When debtors sign on to file a Chapter 13 bankruptcy they promise to pay all of their disposable income. Often they omit expenses that make a plan unfeasible or later their expenses and income change. Because income and expenses can change the plan can be modified and the plan payments may increase or decrease. Also, the length of time the debtor repays can sometimes be increased to lower the payment or the plan may be modified to pay a lower percentage.

Modification Options

Plans that have a 70% repayment are presumed filed in good faith and plans that are filed with 100% repayments are allowed to keep tax refunds and have other privileges. One percent and 0% repayment plans can be approved by the court but this requires that the judge reviews the plan to insure that the debtors are using their best efforts to repay. Plans may need to allow for saving up for home repairs or it may be that an early discharge or conversion is necessary. Chapter 13 plans are not set into stone and as long as the Debtor consults with the attorney early before the situation becomes serious the plan can often be modified to include new expenses such as increases in medical insurance taxes or medical care.
In some cases it may be necessary to modify the Chapter 13 plan because the debtor has become temporarily disabled. Chapter 13 plan payments can be temporarily suspended normally for no more than 6 months. This may allow enough time to cure the problem and the plan can then continue towards discharge. In some cases of course the Chapter 13 may need to be converted to a Chapter 7.