Change in % pmt to unsecured creditors from 100% to a lesser %

[ScottBAustin]

My wife and I filed a CH13 repayment plan in 2012 and were approved to pay back 100% to unsecured creditors. I lost my job 4 months ago and received a moratorium to temporarily stop payments. Now I have a new job but the salary is much less than before. I want to file a motion to modify our plan to reduce our CH13 payments in alignment with a new NDI (due to lower income).

My attorney says that we cannot file a motion to modify because our original plan was approved based upon payment of 100% to unsecured creditors. She is saying the trustee will dismiss our case if we do not make the original payment amount.

We now have $2000 less income; why can't we modify our plan accordingly?

[LadyInTheRed]

People modify their plans all the time due to a change in income. Unless you had non-exempt assets worth as much as your unsecured debt, then I don't understand your attorney's answer. Saying you can't modify the plan because of what is in the original plan makes no sense. That's the whole point of modification. The trustee cannot dismiss your case if the judge orders a modification and you comply with the modified plan. In fact, the trustee cannot dismiss your case at all. The trustee can only petition the court to dismiss the case. How much experience does your attorney have with Chap 13s? If I were you, I would consult with another bankruptcy attorney. It may be difficult to change attorneys midstream, but having another attorney tell you that you can modify a plan may give you some leverage with your attorney.

With such a significant reduction in income, might you qualify to convert to a Chap 7?

[ScottBAustin]

Thank you, "Lady"

My attorney just pointed out the following statement in our confirmation order : "The Debtor agreed at confirmation not to seek modification of the Plan unless said modification also pays a 100% dividend to unsecured claims"

Shame on us for not calling that out... we are screwed. Even with the significant redcution in income, we do not qualify for a Chap 7

Thank anyway for your help.

[LadyInTheRed]

Thank you, "Lady"

My attorney just pointed out the following statement in our confirmation order : "The Debtor agreed at confirmation not to seek modification of the Plan unless said modification also pays a 100% dividend to unsecured claims"

Shame on us for not calling that out... we are screwed. Even with the significant redcution in income, we do not qualify for a Chap 7

Thank anyway for your help.

Wow! What led to that kind of agreement?

[dmc-2008]

Can you modify the kookie agreement then modify the plan????

[LadyInTheRed]

It just occurred to me why such a provision may exist in a confirmation order. Perhaps the original plan payment was not 100% of DMI. The trustee would prefer that the plan payment be 100% of dmi, even though the plan pays 100% of unsecured claims so that if the plan is modified later to reduce the payment, the creditors will have received the maximum possible amount before the modification. Instead of having a higher plan a payment, the debtor agrees not to petition to modify the plan in a manner that pays less than 100% of unsecured claims.

ScottBAustin, is that what happened in your case? Where you even aware of the provision before the plan was confirmed?

[Pandora]

Wth kind of Satan trustee puts that clause in a confirmation order?! Worse is what kind of judge agrees to that?!
LITR... How can a plan not have 100% of DMI? You either take all DMI or you don't..there can't be an in between. I can see if someone was trying to keep items but in the end the plan would still has to be feasible. How that language could even be allowed in a confirmation order is mind boggling. It's a set up for failure...

[switch625]

Looking at the language in the CO, the debtor can't "seek" the modification, but what does that mean exactly? That the debtor can't file a motion to modify? Instead, can the debtor and his attorney ASK the Trustee to file the motion to modify the plan instead of the debtor? It's a reach and then there's that word "seek", but it might be worth a try.

[LadyInTheRed]

Pandora, many Chapter 13 plans that pay 100% to unsecured creditors do not pay 100% of DMI. The way the Bankrptcy Code is written, the plan only has to pay all dmi if a creditor or the trustee objects to the plan. I'd link to the language, but I'm on my tablet and it's a bit difficult.

swtich625, I am with you that there must be some way to get around the provision. For one thing, the confirmation order says that the debtor agreed not to request a modification, not that the debtor may not request a modification. Perhaps the OP should push his attorney a bit. If that doesn't work, maybe consult with another attorney.

[Pandora]

Ok I get that but then shouldn't there be the allowance then for an either or? Meaning IF paying 100% of DMI but not 100% to unsecureds (or vice versa) then allowances be made for modification so long as plan allows? Seems to me the trustee is punishing these people when a Ch 13 isn't meant to be punitive. ????I've just never heard of not being allowed to seek a mod due to any reason. I can see if your plan doesn't allow due to secured items etc, but this just seems very off.