I recently had a chapter 13 client connect with me. They’ve been in their chapter 13 for awhile…6 or so. Their plan is confirmed. They’ve just been thrown a curve ball. His wife is a school teacher. She, in a year’s time, will be taking a leave from work for a whole year….apparently unpaid. Obviously this will have an impact on their ability to continue making their plan payments so he’s being proactive in contacting me to see how that will affect their bankruptcy case.
And the answer is….If in a chapter 13 case there is a change in income we can sometimes modify the chapter 13 plan to reduce the payments. That means drafting and filing a new plan, drafting and filing new income and expense schedules plus drafting, filing and scheduling a motion for the court to consider the modified plan based on the change in circumstances. That we do often enough…but, of course, there has to be enough income there to still fund a plan at minimum levels in order to meet statutory requisites and that can vary from one person’s situation to the next depending on what they’ve got going on. If it doesn’t work (not enough income)…then one can consider a chapter 7 case to see if that relief is available. The trustee cannot acquiesce to “hiatus” of payments for any duration be it long or short as the confirmed plan is set per court order and the trustee does not have that kind of authority…only the judge does. The thing to do is if there is a change that will impact your ability to make payments is connect with me when that event does occur or is certain in the relatively near future. At that point we can discuss your options to determine what the best way to handle that change in income will be..either a modified chapter 13 plan with an adjustment in the payment if possible or we’d also take a look at converting the case to that of chapter 7 if that makes more sense.
If you’ve got questions about chapter 7 or chapter 13 bankruptcy we’ll be glad to help.
Attorney David D. Kingsbury