The Huggins Law Firm, PA
Call to Schedule a Free Consultation
Columbia 803-764-1558 Charleston 843-509-0039

Court rules in favor of debtors in plan modification case

A May bankruptcy court ruling may make it easier for South Carolina residents to get a better handle on their own debt. According to the U.S. Bankruptcy Court for the Western District of Arkansas, a couple was allowed to surrender their vehicle to their creditor and convert the unpaid balance to an unsecured debt. This was despite the fact that their Chapter 13 bankruptcy plan had already been confirmed.

The court held that plan modification was allowed under the Bankruptcy Code. It also found that there were no requirements for debtors to have a significant change in circumstance prior to asking for the modification. In this case, the couple paid Arvest Bank $320 a month through a trustee towards the outstanding balance on a 2010 Chevy Equinox. They sought to return the vehicle to the lender and pay the balance pro rata along with other unsecured creditors.

Under the couple's proposal, they would drop their overall plan payment from $605 a month to $260 a month. While Arvest said that the plan wouldn't be in the best interest of the creditors or bankruptcy estate, the court found the plan to be reasonable and in good faith. It found that the the couple could make their payments and that it wouldn't significantly alter their financial obligation under the plan.

Those who are seeking a way to reorganize their debt may wish to file for Chapter 13 bankruptcy with the help of an attorney. It may allow debtors to get current on their obligations over a three or five year period. If balances remain after the repayment period is over, some of the remaining unsecured debts may be discharged. Debtors may attempt to negotiate new loan terms on secured debts like a car loan. During the term of the plan, creditors generally cannot move forward with collection activities.

No Comments

Leave a comment
Comment Information

The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
Suite 201
Columbia, SC 29201

Phone: 803-764-1558
Fax: 803-764-1563
Columbia Bankruptcy Office

Columbia Office

Charleston Office
925-D Wappoo Road
Charleston, SC 29407

Phone: 843-509-0039
Fax: 866-481-2325
Map & Directions

Charleston Office