Chapter 13 Plan Modifications

A chapter 13 bankruptcy case begins just like a chapter 7 case in that the debt the debtor completes all the same paper work. What is different is that in a chapter 13 case, the debtor also proposes a repayment plan, which eventually gets confirmed or denied.

If plan gets confirmed by the judge, that means there is an official determination that the plan is confirmed, which binds the debtor, creditors and the trustee. Even though bound by the plan, if later the debtor needs to change the terms the debtor can ask the court for a modification.

When this request is made, there is an argument under the principle of “res judicata” that the debtor can no longer change their confirmed plan after the fact. Therefore, if the debtor tries to change the plan for no particular reason- for example the debtor changes his mind about whether he wants to keep his home- the debtor would be barred from doing this under the principle of res judicata most likely.

However, if something unexpected happened- like the debtor is no longer employed, or is employed at a reduced income, since that was an unknown circumstance to the debtor at the time the plane was confirmed, the debtor therefore stands a good chance to get the plan modified.

The debtor at this point will file a modified plan, and the trustee and creditors will have a certain amount of time to object. The debtor will set the modified plan for hearing and then the creditors of the trustee will either object and the judge will hear it on the merits, or there will be no opposition and presumably proposed modified plan will go through and the debtor will now be in a new confirmed plan.