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Can Chapter 13 bankruptcy payments be lowered?

When filing for Chapter 13 bankruptcy, you will have already had some financial trouble in repaying creditors. The purpose of Chapter 13 is to help people repay their debts in a way that they can afford, and to stop the harassment from creditors. It is already a great deal of work to create and submit the original paperwork, and the judge will only sign off a filing if he or she believes that it is realistic to pay off.

However, your circumstances can change and you may now be in a position where you can no longer afford the repayments that were originally agreed on. Maybe you lost your job or you are experiencing health problems and cannot work.

If this is the case, you do have options. One of them would be to have your Chapter 13 payment plan reduced. This action needs court approval, and you would need to file a “motion to modify plan payments”.

However, filing this motion and being successful does not always come easily. There are some issues to consider before you file. You should take note of whether you are already paying unsecured creditors. If you are, then it is likely that you can reduce these repayments within the terms of your bankruptcy. You should also note that mortgage repayments are non-negotiable and you must repay them in full or risk losing your home.

Chapter 13 bankruptcy modifications can be a complex issue, so it is important to do your research and speak to an attorney if you have any concerns.

Source: bank rate, “4 limits on modifying bankruptcy,” accessed Sep. 07, 2017