modifying your Chapter 13 bankruptcy plan

Texas Chapter 13 Modification

Reasons for Modifying a Chapter 13 Bankruptcy Plan

Many debtors mistakenly believe that a Chapter 13 bankruptcy is a repayment “prison” where they are stuck paying a certain amount of money for 3 to 5 years regardless of how their circumstances change. Well, that couldn’t be farther from the truth. The truth is that Chapter 13 bankruptcy is designed so that a debtor can make changes to their repayment plan if their financial situation changes. A matter of fact, changes in a Chapter 13 bankruptcy repayment plan is quite common.

Below are five good reasons for modifying your Chapter 13 bankruptcy plan:

  1. A debtor has lost their income because of unemployment or a health crisis. One of the most common reasons that a bankruptcy trustee will allow changes to the Chapter 13 bankruptcy plan is the loss of income. If the income loss seems to be permanent or long-term at least, the bankruptcy trustee will allow the debtor to modify their bankruptcy plan.
  2. A debtor has experienced an increase in expenses. If a debtor has experienced an increase in their expenses which is not new debt, then the bankruptcy trustee may allow the modification of the bankruptcy repayment plan. The most common expense increases which could justify a modification in the bankruptcy repayment plan, is an increase in health care expenses or even the birth of a child.
  3. If the debtor has a new “surprise” debt that he/she didn’t include in the original filing and which must now be added, then the bankruptcy trustee will allow the modification of the Chapter 13 bankruptcy plan.
  4. If the debts included in the Chapter 13 bankruptcy are actually higher than the debtor’s original estimates, then the bankruptcy trustee will allow the modification of the Chapter 13 bankruptcy plan to reflect the true amount of the debts.
  5. If the debtor need to remove a debt that was paid off because they sold the secured property, then the bankruptcy trustee will allow the modification of the Chapter 13 bankruptcy plan. For example, if the debtor sold a car or house, then the Chapter 13 bankruptcy could be changed to reflect that those debts were paid off.

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If you have any questions regarding your Chapter 13 Bankruptcy, don’t hesitate to ask us here or set up a free consultation .