When a Texan decides that filing for Chapter 13 is the best possible option to secure debt relief and have manageable payments, it does not necessarily mean that the agreement is set in stone and cannot be changed. While Chapter 13 is a strategy that will give the debtor a certain amount of time to pay back what is owed under a repayment plan, it can be modified. There could be many reasons why a debtor would like to have the plan altered and it is important to know when and why this might be done.
The Chapter 13 plan can be changed at any time after it has been confirmed and before the payments have been completed. This can be at the request of the debtor, the trustee or the holder of the unsecured claim. The changes can be to raise or lower the amount of the payments on claims of a specific class that is provided within the plan; extend or reduce the amount of time for the payments to be made; or to change the amount that is distributed to a creditor whose claim has been provided for within the plan to the extent that is needed for payments of claims that are not under the plan.
In addition, there can be a modification to reduce the payments that will be paid under the plan by the amount that the debtor spent to buy health insurance for him or her and for dependents if the cost of the insurance is documented and it is demonstrated that: the expenses are reasonable and necessary; the debtor had paid for health insurance in the past and the new amount is not materially larger than what was paid in the past or if the debtor had no health insurance and the amount is not materially greater than the reasonable cost that it would be for the debtor to purchase health insurance than it would be for someone of similar income, health, expenses and is of a similar age within the same geographical area.
Those who are moving forward with a Chapter 13 need to be aware of the potential to change the plan if the circumstances warrant it. Chapter 13 is a useful method to get back into a better financial standing. It is imperative to understand all the nuances that come along with it. For that, a legal professional who is experienced in Chapter 13 bankruptcy can help whether it is at the start of the case or there is a modification sought later.
Source: gpo.gov, “1329. Modification of plan after confirmation,” accessed on Dec. 14, 2016