Amending a Bankruptcy Plan
If you're struggling with debt, you may consider filing for bankruptcy. If you file for Chapter 13 bankruptcy in order to keep your assets, as part of your filing you must submit a detailed plan to the court outlining how you will repay your debts over a three- to five-year period. The bankruptcy court must confirm your plan. If your financial situation changes after filing your plan, you may petition the court to amend or modify it.
Other People Are Reading
-
Changing Your Bankruptcy Plan
-
If you wish to make changes to your current bankruptcy plan, it is advisable to draft an entirely new document rather than simply revising. You may draft an amendment proposal specifying the changes if your plan has not been confirmed. If the court has already confirmed your plan, proposed changes are referred to as modifications. Amendments or modifications may be made for any reason, including the addition or removal of creditors, an increase or decrease in your income or an increase or decrease in your monthly expenses. You must also file amended income, expense and asset schedules, if applicable.
Process
-
The process for making changes to your Chapter 13 plan depends on whether you are proposing an amendment or a plan modification. For amendments, you must file a Motion to Amend with the bankruptcy court where you submitted your initial petition. If you are proposing a plan modification, you must submit a Motion to Modify with the bankruptcy court. Creditors must receive notice of the motion; service of such notice must allow an appropriate amount of time to respond. The time frame for creditor objections varies from state to state. If your creditors do not object and the court approves the changes, you may begin making your plan payments for the new amount.
-
Conversion
-
You may choose to convert to a Chapter 7 filing if the court fails to approve your amended or modified Chapter 13 plan. A Chapter 7 filing entirely eliminates your liability for the debts included in the bankruptcy. The disadvantage of converting to a Chapter 7 case is that your assets become vulnerable to seizure by the bankruptcy court. The bankruptcy trustee in charge of your case is responsible for liquidating your non-exempt assets and distributing the proceeds to your creditors. If the value of your assets does not exceed exemption limits in your state, or if you are comfortable with prospect of surrendering your property, converting may be beneficial if you can no longer afford your plan payments.
Considerations
-
If your proposed modification of a confirmed plan is rejected, you may consider petitioning the court for a hardship discharge. Generally, courts grant a hardship discharge only if your financial situation makes it extremely difficult to meet your plan payments. Contact the bankruptcy trustee in charge of your case if you are experiencing difficulty. Failure to make payments in a timely manner may result in a dismissal of your case, which frees creditors to resume collection actions against you.
-
References
Resources
- Photo Credit Jupiterimages/Photos.com/Getty Images
