Texas Chapter 13 Modifications Caused by Rising Costs

 Posted on December 04, 2025 in Chapter 13 Bankruptcy

For many Chapter 13 bankruptcy filers, the repayment plan they agreed to may have worked at the time they filed. However, with the cost of living climbing sharply in Texas and across the nation, the agreed-on monthly payments may no longer be feasible. In fact, with Chapter 13 plans lasting from three to five years, there is plenty of time for economic conditions to significantly shift. Texas debtors may be able to get some relief through a modification to their Chapter 13 plan when unexpected financial pressures make the original plan unworkable.

Trustees and judges now routinely see cases where increased rent, insurance premiums, utilities, and groceries make the original payment plan unrealistic. The good news is that these types of inflation-driven changes are among the strongest grounds for a court-approved modification. If you are having difficulty meeting your monthly Chapter 13 payments, a Wise County, TX Chapter 13 bankruptcy attorney can help explore your options for a potential modification.

What is the Legal Basis for Modifying a Chapter 13 Plan?

Under 11 U.S.C. Section 1329, a debtor who has a Chapter 13 repayment plan can request a modification when his or her income decreases, expenses increase significantly, or the original plan becomes impossible to sustain, so long as the creditors agree and the trustee raises no objection. The top four inflation costs that are commonly approved by Texas courts for Chapter 13 modifications include:

Rising Rent or Mortgage Payments

Housing costs across the state, especially in larger cities like Austin, Dallas, Houston, and San Antonio, have increased sharply. When rent or mortgage payments rise, courts will usually view that increase as a valid change in circumstances, with most trustees approving lower plan payments when documented increases in housing costs strain the debtor’s budget.

Spikes in the Cost of Utilities

Texas electricity rates can fluctuate dramatically, especially during peak usage months. Gas, electricity, water, and sewer bills have risen in many counties, and because these are considered essential living expenses, trustees generally accept these increases as a legitimate reason to modify the repayment plan.

Higher Insurance Costs for Auto, Home, and Health

Auto insurance rates have surged across the state of Texas, along with home insurance premiums. Health insurance premiums, deductibles, and out-of-pocket costs have also been steadily climbing. Like utilities and housing costs, these are considered necessary expenses, so are likely to justify modification.

Increased Transportation Costs, Including Fuel and Car Repairs

Gasoline prices remain volatile, and with many Texas drivers driving older vehicles, more frequent repairs may be necessary. Since transportation is necessary for work and childcare, courts will generally approve a plan modification based on these rising costs.

When Should Texas Debtors Consider a Modification of Their Chapter 13 Repayment Plan?

Debtors who are borrowing to cover basic monthly needs, missing a plan payment, or insurance, or those with housing costs that have risen from 10 to 20 percent over a year, should consider a modification of the repayment plan. If an individual’s budget ratios no longer fit the trustee guidelines, or the debtor has received trustee notifications for plan-payment shortages, a modification is likely the best course of action.

The most common modification is lowering the monthly plan payments, although in some cases, the duration of the plan could be extended when the monthly payment reduction is not sufficient. If the debtor is unable to afford prior payout levels, the dividends to unsecured creditors may be reduced. Finally, post-petition debts may be added to the repayment plan if these debts are medical, automobile-related necessities, or urgent household bills.  

Contact an Arlington, TX Bankruptcy Modification Lawyer

Texas bankruptcy courts are generally receptive to inflation-based reductions, particularly for medical, housing, and transportation costs. A Wise County, TX Chapter 13 bankruptcy attorney from Acker Warren P.C. can help you reduce your monthly financial strain through a modification plan. When you choose our firm, you will always speak with an attorney, rather than a paralegal, and we generally provide an extremely fast turnaround. Call 817-752-9033 to schedule your free consultation.