Plan Modification Mechanics

Chapter 13 plans can be modified during the plan period under § 1329. Common reasons: change in income, change in expenses, default that the debtor wants to cure rather than face dismissal. This page covers when and how modifications work.

Pre-confirmation modification (§ 1323)

The debtor can modify the plan before confirmation under § 1323. This is common during the back-and-forth between filing and confirmation as objections are addressed. Modifications must comply with §§ 1322 and 1325.

Post-confirmation modification (§ 1329)

After confirmation, the plan can be modified at any time before completion under § 1329. Modifications can:

• Increase or reduce the amount of payments on claims of a particular class
• Extend or reduce the time for payments
• Alter the amount of distribution to a creditor
• Reduce amounts to be paid under the plan by amounts paid by the debtor's employer or any other source

Common modification scenarios

Reduce plan payment due to income loss

When the debtor loses income post-confirmation (job loss, hours reduction, illness), the plan payment may exceed what the debtor can afford. Modification reduces the payment going forward.

Required showings:

• Updated income documentation (pay stubs, layoff notice, etc.)
• Updated Schedule I and J reflecting current circumstances
• Trustee's confirmation that the modified plan still meets confirmation tests

Increase plan payment to address arrearage

When the debtor has missed payments and wants to catch up, the plan can be modified to increase the remaining payments to cure the missed amount.

Extend plan term

The plan term can be extended beyond the original 36-60 months only with court approval; total plan period cannot exceed 60 months under § 1329(c).

Default and dismissal alternatives

If the debtor defaults on plan payments, the trustee typically files a motion to dismiss or convert. Modification can sometimes head off dismissal:

• Pre-default: file modification before missing payments if income trouble is foreseeable
• Post-default: respond to dismissal motion with a modification motion proposing how to cure
• Trustee discretion: standing trustees vary in how aggressive they are about default; some grace period is typical for first-time defaults

The hardship-discharge alternative

If the debtor cannot complete the plan but has substantially complied, § 1328(b) allows hardship discharge:

• Debtor's failure to complete is due to circumstances beyond control
• Unsecured creditors received at least the Chapter 7 floor
• Modification is not practicable

Hardship discharges are available but discretionary; courts apply a strict standard.