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Chapter 13 bankruptcy allows you to reorganize your debts into an affordable monthly plan. The typical Chapter 13 plan is 60 months, but some debtors qualify for a 36-month plan. During the Chapter 13 case, you may need to modify your bankruptcy payments. Learn how to modify bankruptcy payments from our Massachusetts bankruptcy attorney.
Reasons to Modify a Chapter 13 Plan to Change the Bankruptcy Payments
There are many reasons why a debtor may need to adjust their Chapter 13 bankruptcy payments. Reasons include, but are not limited to:
- A substantial change in income, such as job loss or reduced hours
- Marriage or divorce
- Becoming disabled because of an illness or accident
- The birth or adoption of a child
- An unforeseen hardship, including a severe illness or emergency
- Surrendering an item that secures a debt
- Changes in monthly payments, such as mortgage payments
A Chapter 13 plan may be modified to lower or increase bankruptcy payments. If you have any changes, you should speak with your attorney as soon as possible. Getting behind on your bankruptcy payments because of a change in circumstances could result in a motion to dismiss your Chapter 13 case.
How Do You Modify a Chapter 13 Bankruptcy Payment?
The steps involved in modifying a bankruptcy payment include:
- Consult your bankruptcy attorney to discuss the necessary changes. Provide copies of relevant documents to your attorney, such as proof of a decrease in income, birth of a child, illness, etc.
- Your attorney prepares and files a Motion to Modify Chapter 13 Plan and a proposed amended plan with the bankruptcy court. The motion provides a detailed explanation of why the modification is necessary.
- Serve the motion on your creditors, the Chapter 13 trustee, and other parties in interest. The parties can file an objection to the motion. If the objection is not resolved before the hearing, the court holds a hearing for parties to argue their positions.
- If no one files an objection or the court agrees with you, an order is issued modifying the Chapter 13 plan and confirming the amended plan.
Your attorney will advise you when to begin making the new payments. Do not change your Chapter 13 payments until your attorney advises you to do so.
Converting a Chapter 13 Bankruptcy to a Chapter 7 Case
Amending your Chapter 13 plan to lower your bankruptcy payments may not be sufficient. If your change in income significantly decreases your disposable income, you might qualify for Chapter 7 bankruptcy.
Your attorney will prepare an amended Means Test to determine if your current income qualifies for Chapter 7. If so, your lawyer reviews your case to determine how converting to Chapter 7 will impact other issues. For example, did you have assets with non-exempt equity that would be at risk in a Chapter 7 case?
If you convert to Chapter 7, you will not make further payments to the Chapter 13 trustee. Your Chapter 7 case could be complete in a few months if everything is in order.
Get Help by Scheduling a Free Consultation With Our Massachusetts Bankruptcy Attorneys
Contact Logan A. Weinkauf, P.C., to schedule a free consultation with an experienced Massachusetts bankruptcy attorney. We can help you determine the best debt relief option for you, including whether filing bankruptcy will give you the fresh start you need.