Expert: Terry Leeders - 6/26/2008

Question
August 2007 I filed bankruptcy to save my house.Im on a 5 year plan paying $200 a month.I was rear ended by a semi,with injuries.I immediately notified my attorney to try and get the payments lowered as I might have surgery.My total debt is $12,000,$3200 was to the attorney,$5400 house.I've spoken to the trustee and explained my situation.So far I'm 3,almost 4 months behind.I said I would catch up with the money from the insurance company for my car.Then when I get my settlement,pay off my bankruptcy.I have a guaranteed income,which pays the house payment.Problem is I'm not suppose to be working,but I am to survive,making barely $400mth.Surgery would put me out for 4-6mths and I won't know for another mth if there going to do surgery.I asked my bankruptcy attorney to have the payments lowered.The options I got were,convert to chapter 7,moratorium for 3mths or drop the chapter 13 but face foreclosure.Even without surgery I'm looking at 6mths minimum to recover.I don't want to lose my house,so what can I do? Why can't they lower the payments while I'm recovering?

Answer
Unfortunately, chapter 13 cases can be very tricky if you have a major change of circumstances.  Normally, you have to pay a certain percentage of the debt back.  Chapter 13 plans must complete in 60 months, and that cannot be extended.  Now, you may be able to modify the plan if some of your creditors did not file claims.  Your attorney can recalculate the remaining balances to be paid based on the filed claims, then stretch that out for the remaining life of the case.  You may be able to get it down a little bit.