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We practice CONSUMER BANKRUPTCY law exclusively. 

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One of the top Bankruptcy Filers

in the Orlando Area

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  4.  » Modification of debt repayment plan after confirmation

A Chapter 13 bankruptcy can last between three and five years. During that time, a Florida filer’s financial circumstances can change dramatically. Therefore, procedures exist to modify a debt repayment plan after confirmation if the changes are significant.

For example, a man was approximately three years into his Chapter 13 debt repayment plan when he was involved in a car accident. He received a settlement for $196,845 of which he received nearly $74,067. As required, he informed the court about the settlement by amending his schedules.

The trustee asked the court to modify the Louisiana filer’s plan to use $11,359 of the funds to pay his creditors. The filer argued that he needed 100 percent of his portion of the settlement for living expenses and ongoing medical needs, but he never provided the court with any evidence to support his position. Therefore, the judge followed the prevailing thoughts regarding whether such a settlement would be part of the bankruptcy estate and ordered that the plan be modified in accordance with the trustee’s proposal.

This case illustrates the importance of providing appropriate evidence to the court if either the filer or the trustee proposes a modification to a Chapter 13 debt repayment plan. Without corroboration, the bankruptcy court will be unable to determine whether a modification would be in the best interest of the filer and/or the creditors. Therefore, it is necessary to bring any significant changes to the attention of the Florida filer’s bankruptcy counsel as soon as possible to ensure that the court has the information it needs to make a ruling.

Source: Bloomberg BNA, “Auto Accident Settlement Funds Belong to Bankruptcy Estate”, Diane Davis, Aug. 10, 2016