Chapter13 be amended for a lower payment?

[appleae]

Our chapter 13 plan was confirmed 1 month ago. Now my wife is losing her unemployment benefits. We will not be able to keep up with the trustee payments in fact, instead of paying $1700, we would only be able to pay about $150 as a trustee payment.

Is it possible to amend our chapter 13 plan for a lower payment? It will be impossible to continue to make the $1700 payments.

[justbroke]

Is it possible to amend our chapter 13 plan for a lower payment? It will be impossible to continue to make the $1700 payments.

It's possible, but yoru attorney would need to file an amendment. The fact that you're losing unemployment benefits is a good reason to amend or to convert to a Chapter 7.

Now, one problem may be that your $1,700 payment is not just your disposable income, and includes payments on other debt. In that case, you wouldn't be able to amend to go to $150/month. You may be able to suspend payments for a while, and then see if you regain unemployment benefits or find a job. You should be talking to your attorney... as soon as your wife loses her benefits. If just just lost them, you should be on the phone with your attorney... not talking to us online! Time is of the essence in these matters.

Based on your financial situation and the needs of your plan (feasibility and all), you and your attorney should come to a decision on suspended plan payments, amendment to plan, or, perhaps, Conversion to Chapter 7.

[appleae]

Thanks for the feedback. We are definitely planning to visit with our attorney soon.

One question we have is that we are paying $8,000 in mortgage arrears through the chapter 13 plan. If the case dismisses and we must convert to 7, what happens to those mortgage arrears?

[appleae]

Thanks for the feedback. We are definitely planning to visit with our attorney soon.

One question we have is that we are paying $8,000 in mortgage arrears through the chapter 13 plan. If the case dismisses and we must convert to 7, what happens to those mortgage arrears?

Oh, and also our car was wrapped into the plan as well, even though we have only six payments left to make on it.

[justbroke]

One question we have is that we are paying $8,000 in mortgage arrears through the chapter 13 plan. If the case dismisses and we must convert to 7, what happens to those mortgage arrears?

Now you may have a problem.

In the Chapter 7, you need to either redeem, surrender or reaffirm the mortgage. It is possible that if you don't reaffirm the mortgage, if the lender even let's you, that the fact that you are in arrears... will cause the lender to motion for relief from the automatic stay so that they can pursue foreclosure. Before I go any further into that, the question is... if the $1,700/month includes your mortgage payment, then you have serious issues anyhow.

I think the key for you will be, probably, to do a suspension of payments for a few months, and try to work on the income. If that $1,700/month was actually just disposable income, and not used to pay your mortgage and car, you should be able to stay in the Chapter 13 and continue paying your arrears through a modified plan.

[appleae]

Our attorney told us that a Chapter 13 plan can only be amended so long as it does not lower the % payback of unsecured claims in the plan.
Does this sound right? Need a sanity check. Thanks!

[SMinGA]

If there is a reason that you need to pay a certain amount to unsecured, yes. Such reasons would include non-exempt assets you need to protect. Or if you made payments to friends/family and so you need to pay at least that much to unsecured.

Our attorney told us that a Chapter 13 plan can only be amended so long as it does not lower the % payback of unsecured claims in the plan.
Does this sound right? Need a sanity check. Thanks!

[krielly]

It really all depends on your overall situation.

Rule of thumb is that your creditors must receive at least as much as they would if you had filed Chapter 7 and the trustee liquidated your assets to pay creditors........

We were able to amend our 13 back in 2008 in order to purchase a vehicle. It did reduce our plan payments and the percentage to unsecureds, but creditors were still receiving more than they would have if we filed 7 and the trustee liquidated our non-exempt assets.

Disclaimer - this was my personal experience, but we filed "old law", so the experts may say I am way off base