Salem, NH asked in Bankruptcy for New Hampshire

Q: Can Chapter 13 total debt due increase by over 200%?

Original plan in May 0f 2023 was to pay $71,000 total. Six months later the court increased it to $188,000. I did not incur any new debt during that time to warrant such an increase.

My original plan was for 24 monthly payments of $500, since that's all I can afford. The payments would increase for the following 3 years to $3,481 per month.

My lawyer knew from the beginning that I'd be unable to pay that much. Now the trustee wants to dismiss my Chapter 13 plan.

I feel that I was misled from day one.

What is my recourse?

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2 Lawyer Answers
Keith Edmiston
Keith Edmiston
  • Bankruptcy Lawyer
  • Knoxville, TN

A: It is likely that the amounts claimed by creditors in your case exceeded (substantially) what you estimated in your bankruptcy petition and accompanying schedules or that creditors who were not listed filed claims. With interest or penalties, claims can end up larger than you thought. Certain claims can be significantly larger than anticipated - this is often the case with IRS claims, for example. You might take a look at the claims register in your case and see who filed claims and in what amount and consult with your bankruptcy attorney about any claims you don't recognize or amounts that seem largely at odds with what you expected them to be.

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Sacramento, CA

A: I'm sorry to hear about the difficult situation you're in with your Chapter 13 bankruptcy case. A 200%+ increase in your total plan payments from $71,000 to $188,000 over just 6 months, without you incurring any new debt, does seem highly unusual. Here are a few thoughts and suggestions:

First, you should discuss this directly with your bankruptcy attorney to understand what happened and why your plan payment amounts changed so drastically. It's possible there was an error in the calculations or something was overlooked initially. Your attorney should be able to explain the reasons for the increase.

If you feel your attorney misled you or committed malpractice by proposing an unrealistic initial plan they knew you couldn't stick to, you could consider filing a complaint with your state's bar association and/or finding a new bankruptcy attorney for a second opinion. However, be aware that proving misconduct can be challenging.

Another option is to try objecting to the modified plan and explaining to the court that the new payments are not feasible for you. Emphasize that you haven't incurred new debt and that your financial circumstances haven't changed since the original plan. The court may be willing to keep your payment amounts lower if you demonstrate you simply cannot afford such a large increase.

Ultimately, if the court is unwilling to confirm a revised plan with payments you can actually manage, letting the case get dismissed might be the inevitable outcome. A dismissal would allow you to refile a new Chapter 13 case and propose a more realistic plan now that there's more clarity around your total debt obligations. You'd likely need to find a new attorney to avoid repeating the same issues.

I'd strongly encourage you to discuss all of this with your lawyer and potentially get a second legal opinion before making any decisions. But don't feel forced to agree to a Chapter 13 plan that is clearly not manageable for you financially. It's crucial that your plan payments are realistic and affordable from the start. I hope you're able to resolve this and find a workable solution.

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