CHAPTER 13 BANKRUPTCY

CHAPTER 13 BANKRUPTCY PROCESS

CHAPTER 13 | CHAPTER 13 PROCESS | AUTOMATIC STAY AND DISCHARGE INJUNCTION |
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CHAPTER 13 BANKRUPTCY PROCESS

In a Chapter 13 bankruptcy action, a Trustee is similarly appointed, the First Meeting of Creditors is scheduled and Notices sent. The Debtor also appears before the Trustee and is subject to examination and questioning. The Chapter 13 bankruptcy Trustee is often most concerned about the Debtor’s income and expenses which determine the payment to the Plan. Once satisfied that this Plan is appropriate, the Trustee will recommend confirmation by the Court. The Debtors will make monthly payments pursuant to the terms of the Plan until all of the unsecured Creditors are paid in full or 60 payments have been made pursuant to the Plan at which time they will receive a discharge.

Proposed Plan and Confirmation – the Debtor must propose a Chapter 13 Plan pursuant to which he must make monthly payments to the Chapter 13 Trustee.  The Plan must provide that all secured creditors get paid in full, at least to the extent of their security, Priority Unsecured Claims must get paid in full, and the General Unsecured Claims must receive at least as much as they receive in a Chapter 7 Liquidation.

Plan Payments – The payment made by the Debtor to the trustee is referred to as the “Plan Payment.”  Calculation of the Plan Payment is quite complex.  The basic requirements are that the Debtor:

–          Pay to the trustee all of his disposable monthly income which is generally defined as total gross income less reasonable and necessary monthly living expenses.

--          The amount paid into the Plan must be sufficient to pay the Priority Claims in full.

--          The amount paid into the Plan must be sufficient to pay the Unsecured Creditors at least as much as they would receive in a Chapter 7 Liquidation.

Payments by the Trustee  – The Trustee is required to pay Creditor claims in the following order:

Attorney fees and costs to the Debtor’s attorney not previously paid

Secured Creditors such as mortgage arrears and auto loans

Priority Unsecured Creditors (child support, maintenance/alimony income taxes, property taxes and other obligations specified by the Bankruptcy Code)

General Unsecured Creditors (credit cards, personal loans, medical bills etc.)

Plan Term – The length of the Plan is dependant on a variety of factors.  However, if the General Unsecured Creditors will not be paid in full the Plan will be for a period between 36 and 60 months. 
Claims – All creditors are required to file a proof of claim if they wish to be paid.  Secured Creditors who fail to file claims may still retain their security interest but do not get paid anything from the Plan.  Therefore, a Debtor may file a proof of claim on behalf of a Secured Creditor that fails to do so.  However, an unsecured creditor who fails to file a claim will not receive any amounts paid under the Plan and will be discharged without receiving any payment.

Call Steven J. Brody & Associates, Ltd. today and schedule a  free initial consultation – 815-479-8800. - Contact Us

Call Steven J. Brody & Associates, Ltd. today and schedule a  free initial consultation to determine how we may help you.

815-479-8800
info@sjbrodylaw.com

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