Modifying a Chapter 13 Payment Plan

There are many situations that can come up during the period of years after a debtor’s Chapter 13 payment plan is confirmed by a bankruptcy court that can require a modification of that repayment plan.  The court will need to once again review and confirm the modified repayment plan for it to become effective.  The debtor, the U.S. trustee or the holder of an unsecured claim recognized in current unmodified repayment plan are all allowed to request permission to modify a Chapter 13 repayment plan in the following ways:

• Increase or reduce the payment amounts on certain debts already part of the repayment plan
• Extend or reduce the time within which the debts must be repaid
• Change the amount of funds paid to a certain creditor by the current repayment plan to reflect the funds actually being paid to that creditor
• Reduce the amounts required by the current repayment plan to be paid to all creditors by the amount of money the debtor needs to pay for health insurance for himself and his dependants where the debtor can show that the health insurance costs are reasonable and necessary and the debtor has no disposable income to cover the health insurance costs.

Requirement of the Modified Repayment Plan

The modified repayment plan the must be submitted with the request for a request for repayment plan modification and the request for a hearing on the modification request must meet all of the same requirements that the original repayment plan needed to meet along with the new changes making up the modified repayment plan.  The modified repayment plan may not be designed to exist more than five years from the date that the original repayment plan was judicially confirmed.  

Modification Hearing

The repayment plan in its modified state will become the current repayment plan after the confirmation hearing unless the bankruptcy judge disapproves the modified plan.  The U.S. Trustee can be asked to review the proposed plan in order to get an idea what changes to the repayment plan would be confirmed by the bankruptcy judge.  A copy of the modified repayment plan and request for a hearing must be served on each of the creditors so that they are on notice of the proposed repayment plan changes that will be reviewed by the bankruptcy judge and the date of the hearing so that they can appear in opposition to the changes. 

Getting Legal Help

If you or a member of your family needs to modify an existing Chapter Thirteen payment plan currently confirmed by a bankruptcy judge then it may be helpful to contact a bankruptcy lawyer to access guidance and assistance through the process of both drafting a confirmable but modified Chapter Thirteen payment plan and appearing at the confirmation hearing.