Monday, October 8, 2012

Is a Chapter 13 Plan Payment "Set in Stone"

Generally, Chapter 13 Bankruptcy cases in Oregon and Washington last 3-5 years.  Many of our chapter 13 clients ask "what happens if my financial situation changes during that time?".  This is a good question. Luckily, chapter 13 can be flexible. The bankruptcy laws allow a plan to be modified.  So, if a debtors income has gone down it may be possible to reduce the plan payment to account for that change. Conversely, if the debtor's income has gone up during the Chapter 13 plan the Trustee or a creditor may argue that the payment should be increased because the debtor can afford a higher payment.

If there is a significant loss of income, or a substantial change the debtor may be eligible for a hardship discharge, or a possible conversion to Chapter 7 to get their discharge sooner.

A good Chapter 13 attorney will be able to guide you through the plan and make sure that your payment remain affordable.  The sooner you inform your attorney about any financial changes during the bankruptcy the easier it will be to resolve those issues and keep you on the right track.

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