Modifying a Chapter 13 Payment Plan

Many Georgia individuals who are facing a financial crisis may consider a Chapter 13 bankruptcy. If you have considered bankruptcy, you may already be aware that, unlike a Chapter 7 which offers no repayment plan, a Chapter 13 bankruptcy allows you to enter into a plan that will last anywhere from three to five years.

With up to a 60-month timeline, how sure can you be that you will really be able to maintain your financial obligation under the new structure consistently each month? What happens if you lose your job or your business suffers a downturn? What if you experience a health crisis? There is no possible way that you can be certain that you plan is viable for 36-to-60 months.

As Atlanta, Georgia bankruptcy attorneys, we are frequently asked questions regarding modifications of Chapter 13 payment plans. Fortunately, the law has taken the uncertainties of life, health, and employment into account. There is a provision in the federal bankruptcy code—11 USC 1329(a) to be specific—that allows the debtor, trustee, or holder of and unsecured claim to request a modification in order to:

  • increase of reduce payments on claims of a particular class
  • extend or reduce the time of the scheduled payment
  • alter the amount of the distribution to a creditor whose claim is provided for by the plan to the extent necessary to take account of any payment of such claim other than under the plan
  • to pay for health insurance for the debtor and dependents. (Specific conditions apply.)

While this should be of some relief to anyone in Atlanta or the rest of Georgia who may be seeking Chapter 13 bankruptcy protection, this provision can be a double-edged sword. In the event, the debtor experiences an increase in income, a trustee or debt-holder can also request an increase in the payments that they receive.

Whether you are seeking a Chapter 13 bankruptcy, a Chapter 7 bankruptcy, a modification to a Chapter 13 bankruptcy, or just some information about financial restructuring, it is always in your best interest to contact a reputable professional Atlanta-area bankruptcy attorney.