Retiring a Chapter 13 Plan: An Analysis of Post-Confirmation Plan Modification and the Applicable Commitment Period

Chapter 13 trustees are tasked with extracting as large of a plan payment from debtors as possible, but it is difficult for debtors to maintain an austere budget over a period of five years. [...]the ability to shorten the life of a plan may have a significant impact on the overall success rate of chapter 13 plans.12 Conversely, studies suggest that longer plan lengths decrease a debtor's chance of success, but even more surprisingly they indicate that creditor recovery rates are not materially higher with longer plans.13 Nevertheless, chapter 13 trustees and unsecured creditors may object to shortening a plan's term out of concern that a shorter term might allow the debtors to avoid paying creditors the maximum amount they can afford.14 For example, in some cases, bankruptcy courts have denied requests for early plan completion because the debtor's income was going to increase and the debtor's request was made to prevent this increased income from being paid to creditors.15 Sometimes debtors may realize a windfall from an inheritance, the sale of exempt property, or some other non-income based source.