Modify Chapter 13 to Make Payments Lower
Modify Chapter 13 to Make Payments Lower
Your attorney can modify your Chapter 13 Plan to make your payments lower. This is done by a motion to modify that is filed with the court. Your Chapter 13 plan can be modified to lower payments only in certain situations. These situations include drops of income, increased expenses, or changing what you decide to pay through your Chapter 13 plan.
Drops of Income
Your attorney can many times modify your Chapter 13 payment when you have a drop of income. The Chapter 13 plan payment can then be lowered to match the new, reduced income level. Your attorney will need to file a motion to modify your Chapter 13 plan. Then, the court will grant this motion and your payment will be lowered.
Keep in mind that the income drop must be significant. Smaller drops of income may not affect the Chapter 13 payment. You need a large drop of income to get a lower payment. In certain cases, you may even be able to convert your case to Chapter 7 if the drop of income is large enough.
Also, in at least a couple situations, lower income alone will not allow you to drop your payment. First, if you filed Chapter 13 to protect assets, you will likely not be able to lower your payment. You will have to keep making the same payment as before to protect those assets. Your payment is based off of assets in such cases instead of income.
Second, many times your plan payment is only based on what you are paying through the plan. For instance, a plan that is paying a mortgage and two cars might only be expensive simply due to the items being paid. An income drop will not allow a decrease in payment because the minimal amount is already being paid to unsecured creditors. In such cases, there is no room to drop the payment unless a secured item is surrendered instead of paid through the plan.
Increased Expenses Can Modify Your Chapter 13 to Lower Payments
Another way to modify your Chapter 13 plan to make payments lower is through increased expenses. If you are required to pay higher expenses for housing, medical, or other essential items, you may be able to lower your payment. However, this type of Chapter 13 payment drop is not very common. The court is strict on what types of expenses are allowed. Any expenses will have to pass the court’s strict test.
Changing What You Choose to Pay
Your Chapter 13 gives you a degree of choice on what will be paid through the Chapter 13 plan. For instance, during the plan, you can choose to surrender the collateral on a secured loan. If you choose to give up your house or car, it is likely your Chapter 13 payment can be lowered. Sometimes this can make your plan payments on case significantly lower.
