Chapter 13 Plan Payment Too High?

Is your Chapter 13 plan payment too high in your bankruptcy case?  You can sometimes have your bankruptcy trustee agree to reduce your plan payment.  Your Chapter 13 plan payment can be reduced due to variety of reasons.  If your payment is too high, such a reduction can save an otherwise impossible case.

Chapter 13 Bankruptcy Payment Too High

Reduction in Income Could Reduce your Payment

If your Chapter 13 plan payment is too high, you can sometimes get it lowered if you encounter a reduction in household income.  If your income reduces, you are many times also allowed to reduce your plan payment.   This is accomplished usually by filing a Motion to Modify your Chapter 13 plan.   Or, alternatively, if your plan is not yet confirmed, you can sometimes just have your attorney file an amended plan.  If your income has dropped considerably, you may even be able to convert your case to a Chapter 7 in some situations.

However, even if your Chapter 13 plan payment is too high, you cannot always reduce it simply due to a drop of income.  Some cases are already calculated at the absolute minimum level for achieving your Chapter 13’s goals.   For instance, if you are paying your mortgage and car payment through the Chapter 13 plan, you could very likely already be paying the minimum amount required for case.   In such cases, a drop of income would have no effect on reducing even an impossibly high Chapter 13 payment.  You would likely need to change the plan by surrendering the car or house in such a situation in order to drop the payment any further.

“Changing Your Plans” to Change Your Payment

Your plan payment can many times be reduced in Chapter 13 by “changing your plans.”  For instance, consider if you changed your plans by surrendering an over-priced, high-balanced automobile in your Chapter 13 case.   If this automobile had a balance of $35,000 in your Chapter 13 case, you could reduce your Chapter 13 payment up to even $650 per month.  Surrendering a house, a boat, a motorcycle, or other items can also sometimes have a similar effect.

Remember, however, not all cases are alike.   Every case has different requirements on repayment to creditors.  If your income is too high, you may not realize a significant reduction in your plan payment by “changing your plans.”  You may be required to pay back up to 100% of your debt in your Chapter 13 case depending on your debt and income levels.  Although you will generally always reduce your plan payment by surrendering items, a 100%-pay-back case may not receive the same dramatic discount on plan payment that other cases may realize in surrendering items.

Changes in Expenses or Circumstances

When a Chapter 13 payment is too high, a change of expenses or circumstances can also warrant a reduction in your Chapter 13 plan payment.  New expenses (if high enough) are many times valid justification for reducing your plan payment.  For instance, if a family is required to take on massive new daycare or child care costs, a reduction in the Chapter 13 plan payment may be possible.  If a family member becomes ill, this may result in new medical costs and a reduction of the Chapter 13 plan payment may be possible.

If your circumstances change, you can also sometimes reduce your Chapter 13 plan payment.  For instance, if you are encounter marital problems and become separated, you may be able to reduce your plan payment.   If more family members or dependents are added to your home, you may also be able to reduce your plan payment.

Chapter 13 Payment Too High?  Bankruptcy Lawyers Have the Know-How

Remember, always seek the advice of an experienced bankruptcy attorney if you want to reduce your Chapter 13 plan payment.  Most Chapter 13 bankruptcy attorneys have dealt with these Chapter 13 payment issues hundreds of times.  They have the experience to explain exactly what is possible in reducing your payment.