Modification allowed for Chapter 13 bankruptcy
Florida residents who have already filed for Chapter 13 bankruptcies may be able to amend their plans by surrendering their vehicles to creditors and allowing any deficiencies to be treated as unsecured claims. The United States Bankruptcy Court for the Western District of Arkansas recently issued a ruling that makes this modification possible.
In a Chapter 13 bankruptcy, individuals who have steady streams of income are able to seek debt relief while maintaining ownership of their properties. However, they are required to submit three- or five-year payment plans that use their future incomes to repay a portion of or all their debt.
Bankruptcy Code Section 1329(a)(1) and (a)(3) allows bankruptcy filers to modify their court-approved plans to reduce the claim payments under a particular class provided by the plan. Debtors can also change their confirmed plans in order to amend how much is being distributed to a creditor with a claim that is provided for by the plan to include any payments that are not in the plan.
Some courts have imposed an additional requirement of a significant change in circumstances in order for someone to be able to make a plan modification. The bankruptcy court was able to find only two circuit courts that have issued rulings on the matter, and neither one imposed this additional requirement. As a result, the bankruptcy court ruled that debtors would not be subject to the change in circumstances requirement.
An lawyer who practices bankruptcy law may advise clients about which type of bankruptcy may be most appropriate for their specific financial situation. This may include Chapter 13 bankruptcy if they have steady sources of income. A lawyer may also be able to stop foreclosures, wage garnishments, debt-related lawsuits, repossessions and creditor harassment.