Will a court consider lowering trustee payments due to new financial circumstances? 9 Answers as of January 03, 2011

Parents filed chapter 13 to save home and primary vehicle. Trustee payment is about $1250/mo and mom's only income is widow's benefit of $1200/mo which leaves her nothing to live on. She wants to save home to sell for equity and also can rent attached building for income in interim.

Will court consider lowering trustee payment due to new financial circumstances?

Bankruptcy has not closed yet as far as I know. The attorney quit mom when dad died and she has no resource for help. The legal aid folks haven't returned any calls and we don't know what to do.

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The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
Yes, she can do a motion to modify the plan. She will need to hire an attorney familiar with the local laws and practice of whatever jurisdiction she filed in. Of course, the modification must still enable her to make the required payments to cure the arrearages on her home within the plan term. If she can't afford that, then she cannot afford to keep the home.
Answer Applies to: California
Replied: 1/3/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Short answer is yes. But not enough facts to determine is feasible. She really needs to find another lawyer. "quitting" maybe a problem for the lawyer she had, she needs to talk to another lawyer about that.
Answer Applies to: California
Replied: 1/3/2011
Greifendorff Law Offices, PC
Greifendorff Law Offices, PC | Christine Wilton
Have your attorney file a motion with the Court.
Answer Applies to: California
Replied: 1/3/2011
Bankruptcy Law Office of Robert Weed
Bankruptcy Law Office of Robert Weed | Robert Weed
Courts will consider changing the plan based on changed circumstances and the death of your dad is a changed circumstance. If there is equity in the house and mom needs a lower payment until she can sell the house to pay off the debts and keep the rest of the equity, most courts would give favorable consideration to that kind of plan.
Answer Applies to: Virginia
Replied: 1/1/2011
Carballo Law Offices
Carballo Law Offices | Tony E. Carballo
You need to make a motion to modify the Plan. The problem might be that your mother could be paying secured debt such as the arrears on the mortgage and a car payment. Those must be paid in the plan for maximum 5 years. If the payment she is making is the minimum required to pay the secured debt and/or priority debt (usually taxes) and she cannot afford it, then the plan will fail. She might want to surrender the car to lower the payment if that is an option. If she is paying arrears on the mortgage then a loan modification should be explored. Your mother can sell the house while in Chapter 13 with permission of the court. She really, really needs a local bankruptcy lawyer since this is highly complex. You really cannot depend on legal aid for this. A lawyer can't just quit a case. He or she must have been allowed to withdraw for some reason acceptable to the court. If not, then he or she still represents your mother.
Answer Applies to: California
Replied: 1/1/2011
    Mankus & Marchan, LTD
    Mankus & Marchan, LTD | Tony Mankus
    From the facts provided in your question, it appears that your mom has a confirmed Chapter 13 plan requiring her to pay $1,250.00 per month. If her financial circumstances have changed, her bankruptcy attorney can prepare an amended plan and file a motion in court requesting approval of the amended plan. The challenge is to prepare an amended plan that is feasible. If your mom has substantial equity in assets, such as real estate, it may not be possible to propose a feasible amended plan unless she is able to use the equity in the assets to fund the plan. That may require the sale, or refinancing of the property - if possible.
    Answer Applies to: Illinois
    Replied: 1/1/2011
    DiManna Law Office, LLC.
    DiManna Law Office, LLC. | Dawn DiManna
    Yes, this should be possible. If you would like to call my office I might be able to help your mom.
    Answer Applies to: New Hampshire
    Replied: 1/1/2011
    Christopher Legal Group
    Christopher Legal Group | Shawn Christopher
    You may be able to reduce the monthly plan payment due to a change in circumstance. Without knowing more about that particulars of your parents' bankruptcy, it is difficult to know for sure that a chapter 13 is even still feasible. If the mortgage payment was current at the time of the filing of the chapter 13, and it is still current now, the bankruptcy might be eligible to convert to a chapter 7 without risking the home. This would mean that there are no more plan payments and all of the dischargeable debt would be discharged. Depending on the state of their residence, the amount of equity in the home may be fully exempt (i.e. protected). The home could then be sold after the discharge. I suggest that your mother speaks with her bankruptcy attorney to discuss the changes in her finances.
    Answer Applies to: Nevada
    Replied: 12/31/2010
    Law Office of David P. Farrell
    Law Office of David P. Farrell | David Farrell
    Yes. Your mom can ask the court to modify the plan based on a change in financial circumstances to change the amount of the plan payments, the length of the plan and/or the percentage paid to unsecured creditors. Whether mom can afford the modified plan will depend on the term of the original plan and percentage being paid to unsecured creditors.

    If a large percentage of the $1,250.00 monthly plan payment is being allocated to pay the arrearage on the home loan, modifying the plan will be difficult because, generally, secured claims like mortgages have to be paid in full. Conversely, if the most of the plan payment is going to pay unsecured creditors like credit cards, there is more "room" in the plan to modify the payment because unsecured creditors have the lowest priority and may be paid less than the full value of their claim. Sometimes unsecured creditors get nothing at all, which is sometimes referred to as a "zero percent plan". It may also be possible to extend the term of the plan if the original plan was for a term of less than 60 months.

    Your mom should call and speak to an attorney like me immediately.
    Answer Applies to: California
    Replied: 12/31/2010
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