How to Reduce Chapter 13 Payments

People who file Chapter 13 bankruptcy must create a repayment plan for their debts. The plan takes into account the debtor's income and expenses to come up with the monthly payment amount. If a debtor's income decreases or his expenses increase, section 1329 of the United States Bankruptcy Code allows him to temporarily or permanently modify the Chapter 13 repayment plan to reduce the monthly payment. Debtors must file a motion and submit amended petition paperwork to modify a Chapter 13 plan.

Request the Motion to Modify Chapter 13 Plan form from your lawyer or download it from your jurisdiction's website.

Fill out the motion documents. The exact information you must provide varies by jurisdiction, but the basics include your case number, name, the new monthly payment you choose and how long you will need the reduced payment. Complete new income or expense petition documents and write a new payment plan. Get documentation such as pay stubs, unemployment or Social Security statements or proof of social service payments.

File the motion request, the amended plan and the amended petition documents at the courthouse or give it to your lawyer to file on your behalf. Include copies of your documentation. The court does not charge a fee to file these documents.

Wait 20 days from the day you file the motion for creditors to file objections. If there there are no objections, the court will review the documentation you provided to prove your circumstances and grant your request to modify the plan. If creditors do object, you will have to go to a hearing before the judge to prove you cannot afford the current payment.


About the Author

Lauren Treadwell studied finance at Western Governors University and is an associate of the National Association of Personal Financial Advisors. Treadwell provides content to a number of prominent organizations, including Wise Bread, FindLaw and Discover Financial. As a high school student, she offered financial literacy lessons to fellow students.