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Courts deals with issue of post-petition modification of Ch. 13 repayment plan, P.2

On Behalf of | Aug 3, 2016 | Chapter 13 Bankruptcy |

Last time, we began looking at a recent case from the Seventh Circuit Court of Appeals in which the court ruled that the U.S. Bankruptcy Code allows a trustee is to petition the court for repayment plan modification after the plan has already been completed. As we noted, the ruling allows the bankruptcy court to find that the debtor is in default if additional payment is due, which can lead to several results.

If the debtor is deemed to be in default, there are several possibilities. One is that the debtor is given the opportunity to cure the default, if possible. Another is that the court may block discharge of debts, which would be an unfortunate for the debtor. Another possibility is that the Chapter 13 case could be dismissed so that it may be converted to a Chapter 7 filing. 

For debtors, the topic of repayment plan modification is an important one to understand in the bankruptcy process, as a debtor’s financial situation can change during the course of a repayment plan, or other circumstances can arise which make it necessary to modify the plan.

When circumstances change such that the repayment plan becomes no longer practicable, a creditor threatens to object to the repayment plan, or the debtor unintentionally fails to list all the creditors, the plan may be modified. Knowing how to go about doing that is important to ensure the process goes as smoothly as possible. It is also important to ensure that the debtor receives the benefit of discharge through the bankruptcy process so that he or she is able to emerge from bankruptcy with a fresh start. 


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