When A Bankruptcy Repayment Plan Can Be Changed

Part of Chapter 13 bankruptcy is consolidating debt and creating a plan to repay your debts that cannot be discharged. You'll have to make regular payments towards the debts as agreed to when filing for bankruptcy. While it's common for these plans to remain unchanged over the years until the debts are paid off, there are some exceptions that can justify a change. The trustee of your bankruptcy may choose to modify your payment plan in these situations.

Income Change

Part of your bankruptcy agreement involves reporting changes to your income to your case's trustee, and they may decide to change the amount that you owe each month based on how much you now make. Be aware that a payment amount can increase or decrease, depending on what kind of change you had with your current income.

For instance, if you received a raise or a bonus from your current employee, your overall payment amount may increase as a result. If you recently lost your job and found a new one that pays less money, the payment could be lowered to match your new income.

New Debt Is Acquired

It's possible that you took on a new debt that occurred after the bankruptcy was finalized. This can happen if you were hospitalized and now have outstanding medical bills. Instead taking on those new bills in addition to your bankruptcy monthly repayment, the trustee can add them to the repayment plan to consolidate your debts.

However, the payment amount will go up to compensate for the additional debt added to the repayment plan. Even though the hospital bill is considered an unsecured debt, it cannot be discharged if it was acquired after the bankruptcy was finalized.

You Lose or Sell an Asset

The amount of the repayment plan is based off of your existing debts, income, and assets that you have. The repayment plan could change if you decide to give up or sell an assets that you own, which would change your current financial situation.

The loss of the home can be done by selling it yourself and gaining the additional income, or due to not being able to make payments and giving it back to the bank. If your new mortgage or monthly rent is more or less expensive than what you are paying before, the debt repayment amount could be adjusted accordingly.

Have questions about your bankruptcy payment? Speak to a local lawyer, such as at Downard & Associates, for assistance.