Can A Chapter 13 Be Amended?

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We did a chapter 13, we are just coming up, well its about 6 months but on when we did that we had a vehicle and we thought, well we’ll try and do a cram down on it. They estimated it, the attorneys, estimated it way lower. So of course, the finance company argued that we had to do an appraisal on the vehicle. Turns out we’re ending up paying what we owe because it appraised for more than what we owe. Now when we they did that, they setup our plan payments according to that cram down number, the lower number. Now they are coming back and added you know roughly $7000 or $7500. Is it unreasonable, I don’t know what the schedule or the formula, is it reasonable for it to go up like $300 a month?

If it was some amazingly expensive vehicle maybe. It wasn’t. Just an old pickup.

There is a lot of things you can do with secure a debts in chapter 13s. I mean, it is a fascinating thing when you get into it but what Paul mentioned here calling it a cram down is where you take a vehicle and you instead of you know in his case an older pickup but let’s say you got a 2004 Ford F150 that might be worth $6000 but you owe $20,000 on it because the interest rate was crazy and maybe you rolled over some negative equity from a prior vehicle into it so when a cram down what you would do is establish the value of the truck and then buy the truck back out of the bankruptcy estate over the life of the chapter 13 plan. So instead of paying $20,000 the balance on the truck note, you are actually paying the $8,000 that the truck is worth over the life of the chapter 13 plan.

Now if I’m following Paul right, his attorneys when they filed the case estimated that the value of the vehicle was one thing and then of course the creditor object and said oh no wait it worth a lot more than that and they came up with another value that was even higher than what he owed on the balance of the truck to begin with. So the first kind of breakdown here the first problem what happened was you shouldn’t be guessing at these things you can go to a local company here in the Denver area and get what’s called desktop appraisal. All you have to do is email them some pictures some of the vehicle and little description of it and they will appraise it for you prior to filing.

That’s kind of what I was thinking was I didn’t know why the attorney got it so low but then to base it on that. Is it tough to amend that to try and . . ? We have a call in and we can’t seem to get a call back from our attorney because there is also some taxes that were you know for prior years should have been dischargeable. Well now you know there were IRS and all that. We think they padded some numbers to appease the IRS. I mean it’s just kind of gotten a little but you know to go up $300 a month on that kind of thing and we can’t seem to get them to answer us back. So I didn’t know how tough it would be to amend that to get it to come down to where we think it should be.

Well it kind of depends on where you are at in the process. If the plan is already been confirmed then you would be looking to modify the plan as supposed. If you are in a situation where it was prior to confirmation you could just do it by an amended plan. But you know in the first instance they should have had an appraisal done so you are not sitting and guessing what the numbers are and then getting shocked at the end of the day.

That would have changed whether we put it in the plan or kept making payment.

And now you are paying more than the original balance you owed on it. So if that was the case you also have the election in a 13 that instead of what you were trying to do which is payout the value of the vehicle over the life of the plan, you could’ve just stretched the balance, the remaining balance, over the life of the plan. And for the life of me I don’t know why they just didn’t go with that option.

I think that is what they did now actually. Because the appraisal of the vehicle came back more than what we owed so basically they are making us pay off what the balance of the loan was so in essence we are paying it off over the life and it wouldn’t be any more. Whereas I could have kept it out of the plan.

Sure. If you only had about 2 year left on the vehicle’s payment you may not have wanted to do it completely outside of the plan so you had a $300 payment on your truck each month when the two years on that truck loan were up and you are in a 3 or 5 year long chapter 13 plan you just freed up $300 on your monthly budget that the bankruptcy code is then going to want you to commit to the chapter 13 plan payment so you’d get what’s called the step up your and then you plan payment goes up by those $300 that you now have on hand supposedly because the vehicle financing went away. So probably the safest way to keep everything stabilized would be to put it through the plan. But just do it on the balance.

So we did it fairly well with keeping it in the plan and it’s I don’t think their math and everything added up to where it should cost us 300 more dollar a month I mean.

Yeah, that’s something you would actually have to have the plan in front of you and basically recalculate the numbers to find out what was going on. But, you know, with bankruptcy law there really shouldn’t be any guess work to it. I mean, there is a set of, there is a code and you know much more organizational than adversarial in the bankruptcy world.

We all know each other, we all work together every day and we just want to make sure everybody is you know getting done fairly what needs to be done fairly so you know if you had known the real value of that vehicle you would not have the expectation that you were given going in and you would have known what was going on correctly from the get go which makes a world of difference.

Oh absolutely because now we are trying to get a fresh start and help trying to keep, we needed to keep the house and you know so that’s and we wanted to kind of I shouldn’t say do it the right way because that’s not the what I mean, we wanted a fresh start. Get rid of the old debt that we couldn’t pay for because it was too much to make all the payments. But now, 300 more dollars that we are going to have to pick up in 6 months and, I mean that’s not really a fresh start because now we are back into the struggling mode.

It’s not supposed to be that way it supposed to be based on your ability to pay so, that might be something you want to take in and get looked at, see if some kind of modification could be filed that might make it more feasible for you to do and that way you not having to incur a new debt while you are in your chapter 13 trying to get away from your old debt.

And I just wanted to find out if it was a tough if they look at real tough or if it’s pretty easy to modify that, to make it more reasonable.

No, a modification is just real similar kind of the process you went through when it was being confirmed in the first place. It’s just a motion, a modified plan and then the same set of confirmation hearings that you went through when the original plan was confirmed.

To continue reading the answer, see the text below or jump to another question using the links below:

  1. How Do You Know If You Qualify For A Bankruptcy?
  2. What Is Unsecured Debt?
  3. What Is The Process Of Bankruptcy Like?
  4. Can A Chapter 13 Be Converted To A Chapter 7?
  5. What Is the Process Of Bankruptcy Like – Part 2
  6. When Is The Best Time To File?
  7. How Can I Rebuild Credit After A Chapter 13?
  8. Can A Chapter 13 Be Amended?
  9. Can Filing Bankruptcy Prevent An Increase In Out Of Court Settlement?
  10. Is There Any Way To File Bankruptcy And Keep My Car Or My House?
  11. Will People From The Bankruptcy Court Send Someone To My House To Look At My Stuff?

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