A Chapter 13 repayment plan may last several years. During that time, losing a job or working fewer hours could make your monthly payment difficult to afford. That problem may become more serious if your regular household costs stay the same.
A drop in income does not always mean your Chapter 13 case must end. Federal bankruptcy law allows you to ask the court to modify a confirmed plan before you finish making payments. Your updated income and expenses help show what terms your budget might support.
You may ask to modify your plan
A Chapter 13 modification may reduce payments on certain classes of claims or change the period for making those payments. The revised plan still must meet the requirements that federal bankruptcy law places on modified plans.
A lower payment could help if your earnings fall and the existing amount no longer fits your budget. The court does not make that change automatically. You must request the modification and follow the required procedure.
In the Southern District of Indiana, your motion must state both your current payment and your proposed payment if you seek a different amount. Creditors and other parties receive notice and have an opportunity to object.
Your updated budget matters
If you base your request on changed income or expenses, Southern District of Indiana rules require you to file supplemental Schedule I and Schedule J forms. These forms show what you now earn and what your household spends each month.
Those figures give the court and trustee a current view of your finances. They may also show why your existing payment has become difficult to maintain.
Keep records of the change
A loss of income may make an existing Chapter 13 plan harder to manage. Keeping accurate records could help document the reason for your request.
Consider saving recent pay stubs and records showing lost work or reduced hours. You might also keep documents that show major changes in household expenses. These records can give you a more complete financial picture as you move through your case.
