§ 114.3     To Reflect Changed Circumstances
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 114.3, at ¶ ____, LundinOnChapter13.com (last visited __________).

Especially in jurisdictions where there is a substantial delay between filing and confirmation,1 preconfirmation modification may be necessary to manage changes in circumstances. If the debtor lost a job, got a better job, got a worse job, made or lost overtime, received an inheritance, wrecked a car,2 married, divorced or had a child, counsel will probably have to modify the plan. A plan based on better times will fail of feasibility at confirmation if not modified to reflect the downturn in the debtor’s affairs.3 If the debtor’s financial circumstances have improved, preconfirmation modification may avoid failing the good-faith4 or disposable income5 tests for confirmation.


11 U.S.C. § 1326(a)(1) requires the debtor to commence making the payments proposed by a plan within 30 days after the plan is filed.6 If circumstances change and the debtor is not able to make the payments required by the original plan, the debtor must modify the plan to avoid the risk of conversion or dismissal for failure to comply with § 1326.7 It has been held that preconfirmation modification under § 1323 does not retroactively alter the debtor’s obligation to commence making payments under § 1326 consistent with the original plan, thus default in payments under the original plan cannot be cured by simply lowering the payment in the amended plan.8


In addition to modifying the plan to reflect changed circumstances, the debtor should amend other Chapter 13 documents that contain information that has changed. For example, Schedules I and J to Official Bankruptcy Form 6 should be amended to reflect changes in expenses or income.9


1  See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1  Timing of Hearing on Confirmation before BAPCPA.


2  See In re Walton, 243 B.R. 793 (Bankr. M.D. Ala. 1999) (Debtor can modify the plan before confirmation to surrender a car that was stolen and stripped between the filing of the petition and confirmation. The theft was substantiated by a police report, and there was no showing of any fraud by the debtor. That the car was recovered made physical surrender possible even though the carcass was probably not worth much.).


3  See § 198.1 [ Able to Make Payments and Comply with Plan ] § 111.1  Able to Make Payments and Comply with Plan.


4  See § 179.2 [ Accuracy of Petition, Schedules, Statement and Testimony ] § 104.3  Accuracy of Petition, Schedules, Statement and Testimony.


5  See discussion of projected disposable income test beginning at § 91.1  In General.


6  See §§ 43.1 [ First Test of Debtor’s Good Intentions ] § 44.1  First Test of Debtor’s Good Intentions and 43.2 [ Timing and Form of Payment ] § 44.2  Timing and Form of Payment.


7  See §§ 43.4 [ Consequences of Failure to Commence Payments ] § 44.4  Consequences of Failure to Commence Payments, 312.1 [ Cause for Conversion ] § 141.3  Cause for Conversion and 333.1 [ Cause for Dismissal—In General ] § 152.2  Cause for Dismissal—In General.


8  In re Walters, 223 B.R. 710 (Bankr. W.D. Mo. 1998). See also §§ 209.1 [ Timing, Procedure and Form ] § 114.1  Timing, Procedure and Form and 210.1 [ To Correct Errors in Original Plan ] § 114.2  To Correct Errors in Original Plan.


9  See § 41.3 [ Preconfirmation Amendment of Petition, Statements, Schedules and Lists ] § 41.2  Preconfirmation Amendment of Petition, Statements, Schedules and Lists.