In the case of McCully, Paul and Jennifer; In re, the debtors were allowed to reduce the amount of their repayment plan and the number of payments in Chapter 13 bankruptcy because their income changed in such a way that it placed them below the median income level.
The couple in bankruptcy requested a change in their Chapter 13 Bankruptcy case after one of them (the wife) lost her job. Because of the job loss , the debtors combined income was no longer above the applicable median. Against the objections of the bankruptcy trustee the bankruptcy court allowed the debtors to reduce their Chapter 13 bankruptcy payments and the number of the payments.
The bankruptcy court ruled that because the initial payment arrangement was made in good faith and because the debtors' changed income made it impossible to meet the payment obligations that they should be allowed to modify their Chapter 13 bankruptcy plan.
This is good news for debtors filing for Chapter 13 bankruptcy, especially because of the number of job losses affecting all industries. Because of the massive contraction in jobs in the economy a debtor that agrees to a Chapter 13 bankruptcy plan could find themselves unable to honor the plan because of changed income through a job loss or even salary reduction that is becoming more popular amongst cash strapped companies.