What If My Income Goes Down During My Chapter 13 Case?

A common misconception about filing Chapter 13 in Georgia is that once your Plan is confirmed by the court, you are permanently locked into that monthly payment for the entire duration of your 3-5 year Plan.

Chapter 13 Plan Duration

A Chapter 13 Plan will run from 3 to 5 years, depending on your level of income. If your household income is higher than the median income for the county and state in which you live, your plan payments will be 5 years. If it is below that baseline number, you will be required to make payments to your Chapter 13 Trustee over 3 years.

You Can Modify Your Plan

If you have a change in circumstances sufficient to justify a reduction in your plan payments, your bankruptcy attorney can file a motion with the court requesting your payments be lowered. Loss of income due to a job change, hourly cuts, or even loss of a spouse's income qualify as sufficient justification to lower your monthly plan payments.

In fact, even an increase in expenses can support a motion to amend your Chapter 13 plan payments down. Child-care expenses, car maintenance, and medical costs are all perfectly acceptable reasons to lower your plan payments.

Act Quickly on Changes

Whatever the reason for your increase in expenses or decrease in income, always immediately advise your bankruptcy attorney of any change in circumstances. Missing a plan payment is not like missing your car payment. Once the Chapter 13 Trustee recognizes that you have missed a plan payment, you will find yourself defending a motion to dismiss in 28 days.

Fortunately, you can typically defeat a motion to dismiss by curing your missed payment, but this can develop into a very bad pattern, not to mention increased attorney's fees for your attorney to defend your case's dismissal. The key is proactive communication with your legal team before problems arise.