Chapter 13 Bankruptcy: When Plans Change

plan-a-plan-bIn Chapter 13 bankruptcy, you resolve your debt problems with a “plan.” The heart of a Chapter 13 plan is paying back at least some of your debt with your disposable income over 3 to 5 years. During that time, you make regular payments to a court-appointed trustee, who distributes the money to your creditors according to the terms of your plan.

None of us has a crystal ball, so your original Chapter 13 plan may need to be changed at least once during the life of your case. For example, you might seek to lower your trustee payments because your income has gone down, or your living expenses have gone up.

In this post, we’ll look at two ways to make a change to your Chapter 13 plan.

Pre-Confirmation Amended Plans

A key step in a Chapter 13 case is the “confirmation” (approval) of the plan by the bankruptcy judge. This usually happens a few months after your petition is filed, although confirmation can take longer if the trustee or a creditor raises an objection to your plan.

If your plan hasn’t been confirmed yet, then your attorney can prepare a new plan that incorporates whatever changes you need to make. This amended plan is filed with the court and served upon the trustee and your creditors. The new plan takes the place of the previous plan, and the confirmation process starts anew.

Post-Confirmation Motions to Modify

On the other hand, if the judge has already confirmed your plan, then you’ll need to take a different approach. Instead an amended plan, your bankruptcy lawyer files a motion with the court. The motion asks the judge to modify the confirmed plan by making the changes you’re requesting.

In the Southern District of Indiana, which includes the Indianapolis area, a “Notice of Motion to Modify Chapter 13 Plan” form is served upon your creditors and the trustee to alert them to this motion. The notice gives them 21 days to file an objection to the modification you’re proposing. The court will schedule a hearing to resolve any objections, but if no objections are filed by the deadline, then the judge will usually grant your motion without holding a hearing.

Matt Conrad is an Indianapolis bankruptcy attorney and the founder of Conrad Legal LLC, which helps people in Central Indiana get out of debt with Chapter 7 and Chapter 13.

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