When we file your Chapter 13, we include in the paperwork a repayment plan that provides for a monthly payment by you to the Chapter 13 trustee. Our goal is to come up with a monthly payment that is sufficient to meet the requirements of the bankruptcy law, but reasonable enough to allow you to live your life.
Once your plan is approved by the judge at confirmation, you will be obligated to pay your trustee payment each month for the 5 year (in most cases) term of your plan.
Reduced Plan Payment Caused by Lower Income or Increased Household Expenses
What happens, however, if your income goes down, or your household expenses go up? In today’s economy, 5 years is a very long time and there is a very strong likelihood that today’s budget will change during the term of your Chapter 13 case.
The answer is that we are permitted and encouraged to reduce your plan payment if the amount of your disposable income goes down. We are also obligated to increase the payment if you find yourself with more disposable income.
We end up filing modifications to confirmed Chapter 13 plans in most of the cases we file. The process is fairly straighforward: first, we redo your budget (Schedules I and J of your petition). Next, we prepare a written notice that provides for the reduced payment. This notice of your amended plan has to be served (mailed or emailed) to all creditors in your case.
We then log in to the Bankruptcy Clerk’s website and file the plan amendment and schedule a hearing date for the proposed amendment.
Most of the time, no creditor objects and assuming we have no objection by the trustee, your newly reduced plan payment becomes official.
Emergency Plan Payment Suspensions
Sometimes, we have to take quick action to help our clients handle an emergency situation such as an illness or job loss that causes a short term disruption in income. Judges in the Atlanta area bankruptcy courts will consider motions to suspend plan payments for two to three months.
If your unemployment is temporary, this two to three month grace period allows you to keep your Chapter 13 alive without the pressure of making trustee payments while you search for a new job. And, of course, if the new job pays less, we can then file a plan payment modification.
Solutions Exist for Most Chapter 13 Problems
Judges in Georgia’s Northern District understand that life sometimes gets in the way of Chapter 13. Our experience has been that our local bankruptcy judges will be receptive to reasonable and creative solutions to keep you in Chapter 13. We also have the option of converting your case to Chapter 7, or we can allow your case to be dismissed so that you can start over again when circumstances improve.
If you would like to learn more about how Chapter 13 may help you, please contact our office at 770-393-4985.
