The Short Answer
If your financial circumstances have changed significantly during your Chapter 13 plan — due to job loss, reduced hours, or a medical issue — you can request a reduction in your monthly plan payment. Minor income dips of $50–$100 per month typically won't qualify; the court is looking for a substantial change. The process involves submitting documentation to our office, filing a motion with the bankruptcy court, and attending a hearing. If approved, your new lower payment will be reflected in a modified plan.
Most Chapter 13 bankruptcy cases are set to last for 36 to 60 months (3 to 5 years). During those years, you may experience a change in circumstances that put you in a position where you need to request for your plan payment to be lowered. The purpose of this blog post is to discuss the necessary steps to having your Chapter 13 plan payment reduced. Be sure to read everything carefully and contact our office if you have any additional questions.
When Can I Request For My Plan Payment To Be Lowered?
Receiving paychecks that are just slightly lower than when you filed the bankruptcy (for example, $50 or $100 per month) is generally not sufficient enough to get the court to lower your Chapter 13 payments. The Court is looking for a substantial change in circumstances. This could be a job loss, reduction in hours, medical issues, etc. If your circumstances have changed to the point where your income will not be what it was when you filed, follow our steps to requesting a review and/or modification of your plan payment.
Five Steps To Requesting A Reduction In A Chapter 13 Plan Payment:
Step 1: Email our office with documentation of all household income from the last 60 days. Your email should also include a completed Schedules I and J (click the blue link to get the necessary documents) and an explanation of what has changed and why you need a reduction in your plan payment.
Step 2: Give us a few days to review the information provided. We will contact you after we have reviewed the information and will let you know what we think we could request for your plan payment to be. If you agree with the request, we will prepare a motion to file with the bankruptcy Court.
Step 3: After the motion is filed with the Court, a hearing date will be set. You need to plan to attend the hearing.
Step 4: Before the hearing, you will receive a packet of information from the Trustee’s office. They will be asking you to fill out a budget and submit your last 60 days of income. The budget you provide to them needs to match the one we sent to you that you agreed on prior to the motion being filed.
Step 5: We will attend the hearing with you and if all goes as planned, your request for your plan payment to be lowered will be approved.
A few FYIs:
Not everyone qualifies for a reduction in plan payment. Everyone’s circumstances are different. If you are in a Chapter 13 and your entire plan payment is going to house, car, taxes, and/or other secured or priority debts, then your plan payment cannot be lowered without you being willing to surrender some of your property. In other words, there may be certain debts that the Court has to be able to pay in your case if you want to keep everything.
If you have a temporary change in circumstances (for example, you will be out of work for four weeks due to medical procedures), contact the Trustee’s office in writing and let them know what is going on, and ask if there is any way to have the payments reduced or stopped for one month.
Key Takeaways
- A substantial change in circumstances — such as job loss, reduced hours, or serious illness — is required before the court will consider lowering your Chapter 13 plan payment.
- The process starts by emailing our office with 60 days of household income documentation and completed Schedules I and J explaining what has changed.
- Once we review your financials and agree on a proposed new payment, we file a motion with the bankruptcy court and a hearing date is set.
- The Chapter 13 trustee will send you a budget packet before the hearing — your budget must match the one you and our office agreed on when filing the motion.
- If your entire plan payment covers secured or priority debts like a house, car, or taxes, the payment cannot be reduced unless you are willing to surrender some of that property.
- Temporary hardships — like a four-week medical leave — should be reported directly to the trustee's office in writing, as a formal modification may not be necessary.
Attorney Insight
The mistake I see most often is clients waiting too long to contact us after their income drops. By the time they reach out, they've already missed two or three plan payments, which puts the trustee in a position to file a motion to dismiss the entire case. A dismissal wipes out years of progress — all the equity protection, the mortgage arrears being cured, the creditor payoffs — gone. In North Carolina, the moment you know your income has materially changed, call our office immediately so we can get a motion on file before the missed payments stack up.
