Bankruptcy Repayment Plan Modification

A bankruptcy repayment plan is one that a bankruptcy filer proposes to the courts as a way of getting out of debt. This plan provides the courts with your information, including how you plan to repay certain debts and what debts will be discharged at the end of the repayment period. However, from time to time, it may be necessary to modify this plan. Modification is not always a bad thing, though.

Modifications of Your Plan

There are instances when bankruptcy repayment plan modification becomes necessary, especially since most of these plans last between three and five years. During that time, numerous things can happen.

• Your income may increase or go down significantly. In most situations, the bankruptcy trustee will not change a plan unless your income has changed by a significant amount. Tax returns are usually the place where the trustee will find out that your income has increased, but you can petition the trustee for a change if your income drops.
• You lose your job. This may end up resulting in a dismissal of your Chapter 13 bankruptcy and a move towards a Chapter 7 bankruptcy.
• If you purchase assets, sell assets or otherwise make significant changes in what you own, this may also play a role in the process of obtaining a modification. Specifically, if you need to move or buy a new car, get the bankruptcy trustee’s approval before doing so.
• You may request a modification of your repayment plan if you are facing financial hardships, but you will need to demonstrate this to the court. You will also need to instruct the court on how you will get caught up on your plan (if you missed a payment) or if you will need to change the plan entirely.

In short, the court wants you to repay as much as you can towards your debt. If you cannot do this, according to the terms of the court, your bankruptcy case may be dismissed or changed to a Chapter 7 bankruptcy, if you qualify for it.

Hiring an Attorney

One of the biggest reasons for you to invest in an attorney is to get help throughout the Chapter 13 bankruptcy process. Your attorney can help you to modify your plan if it is necessary and help you to meet the demands of the bankruptcy court whenever the court wants this plan to be modified. The attorney is your best tool for ensuring the bankruptcy process is successful.