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When and How to Modify a Chapter 13 Bankruptcy

On Behalf of | Nov 17, 2023 | Chapter 13 Bankruptcy

When and How to Modify a Chapter 13 Bankruptcy

Filing for a Chapter 13 bankruptcy can be a lifeline for individuals struggling with overwhelming debt.

When you file a Chapter 13 bankruptcy, you are required to submit a repayment plan that must be approved by the Bankruptcy Court. The Bankruptcy Plan sets forth how you intend to treat your creditors in your bankruptcy case.

Your Chapter 13 Bankruptcy Plan lasts for a period of three to five years. his amount of time means that even with good planning, and budgeting, you can still encounter changes in life circumstances. For example, what happens if you are in the middle of your Chapter 13 bankruptcy and you lose your job, or have a major medical issue?

When unexpected events occur during hat negatively impact your disposable income, you have two options:

Modifying Your Chapter 13 Plan

Modifying your Chapter 13 bankruptcy plan involves proposing changes to the court-approved repayment plan. The process can be initiated by either the debtor or the Trustee. The most common ways to modify a Chapter 13 bankruptcy plan are to change the amount of the monthly payment or to extend the term of your plan.

Here’s how it works:

1. Consult Your Bankruptcy Attorney: Before making any changes, consult with your bankruptcy attorney. They will help you assess whether modification is necessary and guide you through the modification process.

2. File a Motion: To modify your Chapter 13 Bankruptcy Plan you need to file a formal motion with the Bankruptcy Court outlining the requested changes. You will need to provide a detailed explanation with documentation as to why the modification is necessary.

3. Creditor Approval: If your Chapter 13 proposal alters the repayment terms to the detriment of your creditors, they may need to approve the changes. It is possible that creditors will challenge the modification, so your bankruptcy attorney must be prepared to handle any challenges . Your bankruptcy attorney will work with your creditors to obtain their consent.

4. Court Review: The Bankruptcy Court will review your modification motion, considering your changed financial circumstances and the impact on your creditors. If the bankruptcy judge approves the modification, you will be required to follow the modified Bankruptcy Plan.

Converting to a Chapter 7 Bankruptcy

If you are struggling to make your Chapter 13 plan payments, you might be able to convert your case to a Chapter 7 bankruptcy.

Here’s how it works:

1. Consult Your Bankruptcy Attorney: Again, start by consulting with your bankruptcy attorney. They will help you determine whether converting to a Chapter 7 bankruptcy is the right option for your situation.

2. File a Notice of Conversion: The Conversion from a Chapter 13 bankruptcy to a Chapter 7 Bankruptcy is a matter of right. It is done by filing a Notice of Conversion with the Court.

3. Bankruptcy Court Approval: The Bankruptcy court will enter an Order Converting your case from a Chapter 13 to a Chapter 7. The conversion is deemed to take place when the Notice of Conversion is filed.

We Can Help with Your Chapter 13 Bankruptcy

If you are interested in filing a bankruptcy case ,or you need assistance with a struggling Chapter 13 case, you need an experienced attorney at Levitt & Slafkes to assist you.

We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..

We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information on this website and blogs is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.