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We got into a chapter 13 payment plan a few months ago but now the payments are becoming too much after a loss of income. When can you change the payment plan?
A chapter 13
repayment plan is a course of action that a debtor proposes to solve his
financial problems. When the plan is confirmed, it becomes binding.
However, there are some instances when changes, sometimes referred to as
plan modifications, may be permitted.
One of the primary reasons that debtors' requests for modifications
are granted is due to a change in financial circumstances. Losing one's
job or being laid off may mean that an individual does not have the
means to make payments. A person who takes a lower paying job may need
to reduce some or all of his payments. There are also circumstances
where debtors may get better jobs or promotions and may want to increase
their payments so that they can conclude their bankruptcy cases sooner.
Debtors may be allowed to modify the terms of their payments to
purchase health insurance for themselves or for their dependents. The
coverage must be both reasonable and necessary. A modification for this
reason is only permitted if there is insufficient disposable income to
cover the costs of the insurance.
Modifications are also permitted when adherence to a plan creates
undue hardship. The term "undue hardship" can cover numerous
situations. A common reason for granting a request on this ground is
long-term illness that requires a debtor to be hospitalized.
If you are currently obligated to the terms of a Chapter 13 repayment
plan and you need to make modifications, you should contact a
bankruptcy lawyer. Getting approval requires filing a request and
successfully navigating a hearing, which is best done with legal
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