Many times throughout their careers, Christian Younger and his fellow bankruptcy lawyers in Oakley, California have worn may hats. In addition to offering legal advice, bankruptcy attorneys often double as people to talk to about financial fears and rebuild financing. And in some cases, they may even be called upon to serve as fortune tellers.
In Chapter 13 bankruptcy, Younger explains, you and your attorney are basically trying to predict the future from a financial standpoint. Using your current information-mainly your monthly income and expenses-a repayment plan and budget are put together to calculate what you are expected to pay the bankruptcy trustee for the next three to five years. However, Younger continues, it is not always the case that you are able to accurately estimate what your income and monthly expenses will be years down the road. You or your spouse could lose a job, need to make costly repairs to your home or car, or expand your family with the birth of another child. And none of these scenarios can be held against you, since they are all unpredictable factors that commonly occur in life.
Since your bankruptcy trustee also understands that these changes cannot always be anticipated accurately, it is possible to modify your repayment plan after your initial petition is approved. In fact, Younger says, modifications in Chapter 13 bankruptcy are actually quite common, and most debtors who choose this option will modify their plans at some point.
Some clients at Younger & Hennecke have even modified their repayment plans eight times. Sometimes, Younger says, the changes are minor, such as the need to repair a vehicle and therefore scale back on payments for a few months. Other times, however, the alterations are permanent because your monthly expenses have increased. This most commonly occurs after the birth of a child.
While the eventual sum that you are expected to pay back to creditors in light of temporary alterations does not necessarily change, permanent alterations are a different story. Again, says Younger, the birth of a new child is the most common reason for a change to the total that you owe under Chapter 13. You may have begun your repayments by paying 50 cents for every dollar that you owe, but after having a child, you may only be able to afford 35 cents on the dollar.
The biggest factor in having these changes approved, Younger says, is that they are being made in good faith and that you are not doing anything to cheat the court and creditors of their rightfully owed money. In the same fashion, he continues, it is also expected that if there is a dramatic increase in your monthly income, you will report those changes to the bankruptcy trustee as well. While generally the bankruptcy trustee will not ask for a report of your earnings on a regular basis, your repayment plan is based on a level of understanding that you will be honest about your finances throughout the length of your repayment period. Before proposing any changes to your repayment plan to the bankruptcy courts, however, it is recommended that you first speak with your bankruptcy attorney to ensure that any alterations to your current arrangement reflect your best interests.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Neither publication of this article nor your receipt of this article create an attorney-client relationship.