Covid-19 Reduction of Chapter 13 Plan Payments. The Court Ordered a temporary reduction of the chapter 13 bankruptcy the United States Bankruptcy Court for the Southern District of Texas. See Court Order (expired June 1, 2020)
The chapter 13 debtor who has suffered a substantial and adverse effect from the current public health issues may seek temporary reduction in the chapter 13 plan payments for the periods from March 1, 2020 through May 31, 2020.
To qualify for a temporary plan payment reduction, the chapter 13 debtors must have suffered a documented financial burden such as lost income, increased child care expenses, increased medical cost or other expenses directly related to the current public health issues.
The Debtor must file a statement in the form attached as exhibit using the emergency chapter 13 payment reductions CM/ECF event code. Debtors must also file a proposed ACH/ EFT or wage order reflecting the proposed reduction.
The amount of the reduction must not be greater than the aggregated amount of any documented financial burden suffered by the debtors that is directly related to the current public health issues unless otherwise ordered by the court.
The reduced payments reflected on Exhibit A are effective when filed until June 1, 2020.
Debtors must resume making their full monthly plan payment to the chapter 13 trustee unless otherwise provided in a proposed modification. Debtors must cure the arrears for the period from March 1, 2020 through May 31, 2020 no later than December 31, 2020
This procedure does not reduce payments to be made by the debtors one directly to creditors – for post-petition taxes, post petition mortgage payments, post-petition domestic support obligations.
Covid-19 Reduction of Chapter 13 Plan PaymentsDebtors must retain documentation that demonstrates the reasonableness of the reduced payments. The documentation must be presented on demand by the chapter 13 trustee or the court. Debtors’ counsel are urged to retain the appropriate documentation from their clients.
This order may be modified on a case-to-case basis on motion filed by a party and interest for good cause shown. If the court has issued an order including, for example, an agreed order condition me the automatic stay that provides a debtor must maintain a certain level of payments to the chapter 13 trustee, to avoid a default the required payment to the chapter 13 trustee is adjusted to the amount shown as Exhibit A for the period March 1, 2020 through May 31, 2020.
The court may adjust the dates in this order as circumstances warrant. This order does not apply to debtors whose plan or plan modification is approved by order entered on or after March 19, 2020.
Debtors’ counsel, whether retained on a fixed or hourly fee base, will be paid a hundred and fifty dollars fixed fee for assisting their clients under this procedure. Debtors who are able to maintain their payments should do so.
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