Legal Question in Bankruptcy in New York

Re: can no longer pay the planned amount

You're smart to ask about this before it happens. This is actually not an uncommon situation; Bankruptcy Trustees see material changes in circumstances like this at least on a regular basis and procedures are in place to deal with them. Generally, the payment rate changes under a modified Chapter 13 Plan (you change the percentage of debt to be repaid or the length of the Plan, or both). However, the modified Plan must be in place BEFORE the debtor can change the payment rate. That's right: you're stuck with continuing your monthly payments at the current rate until your Plan is modified and approved and in place. That process can take a little time.

If you have an attorney, CALL HIM OR HER NOW -- today's Saturday, so call on Monday morning at 9:45-10:00 -- and explain the situation.

If you do not have an attorney, CALL THE TRUSTEE'S OFFICE NOW -- again, Monday morning at 9:45-10:00 -- and explain the situation. If an attorney filed your case for you and/or represented you at the Meeting(s) of Creditors and/or other court or Trustee meetings and you call the Trustee directly, the Trustee will NOT talk with you.

If you can no longer communicate with the attorney who filed your case and/or represented you at meetings (maybe your lawyer retired, or died, or moved, or doesn't return your calls), you'll need to hire another attorney to help you out (remember, the Trustee will NOT speak directly with a debtor who has been represented at meetings or on the petition). Find one who's local to you with whom you feel comfortable. The County Bar Association in the county where you live or the NYS Bar Association (www.nysba.org) are good sources for referrals.

The mistake debtors often make is letting a material change in circumstances situation go without being reported and dealt with until the Trustee notices that payments are not flowing as freely as they once were (Trustees notice that really pretty quickly), and moves to dismiss the case. This is a very bad spot for a debtor to be in these days, since in all likelihood the Trustee would move to dismiss the debtor's petition "with prejudice," which means that the debtor would not be able to seek bankruptcy relief again under Chapter 13 for the listed debts; it would be as if the case had not been filed.

Good luck! Good question!

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.

Re: can no longer pay the planned amount

What I said before.

Also, your lawyer may advise you to convert your case to a Chapter 7 liquidation if your new, lower monthly income qualifies you to do so and your circumstances are such that the conversion would be in your best interest.

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.