A Chapter 13 bankruptcy case involves the reorganization of a debtor’s assets and liabilities through a Chapter 13 plan of repayment. Payments under this plan generally last from 36 to 60 months, or three to five years. Thus, under a Chapter 13 repayment plan, bankruptcy debtors will be required to make 36 to 60 payments over the term of a plan.
The Chapter 13 plan is one of the primary distinctions between Chapter 7 and Chapter 13 bankruptcy cases. Filing a Chapter 13 bankruptcy case requires bankruptcy debtors to propose a plan of reorganization to repay some portion of their debts over this 36 to 60-month period. Once proposed and filed, and, more importantly, before this plan is finalized or confirmed, a window of time exists for creditors and other parties in interest to object to the terms of the plan.
Creditors must establish the precise amount of how much they claim the debtor owes them. This is typically done through filing a proof of claim with the bankruptcy court. Creditors may object to their treatment in the debtor’s Chapter 13 plan of reorganization. All objections by creditors must be resolved or the court will not finalize (confirm) the plan. This a key component of making a Chapter 13 plan work. Writing a Chapter 13 plan which hardly approaches paying creditors according to their legal proofs of claim will face little chance of confirmation and ultimately result in dismissal of the case.
Thus, compromise is one aspect of making a Chapter 13 plan work. Debtors who are open to finding middle ground on the valuation of collateral or the balance due will likely find more creditors willing to sign off on (approve) their plan.
Of course, the ultimate total plan payment must be a total amount that represents the debtor’s disposable income, less certain considerations, and be affordable for the debtor. If a debtor cannot afford to nake his or her plan payment each month, the plan will not work, and the case will fail and be dismissed.
The role of the bankruptcy trustee is to ensure that a debtor’s case abides by all existing federal bankruptcy law. The trustee will review all of the debtor’s paperwork and determine whether the Chapter 13 plan is funded adequately to repay the debtor’s creditors. The trustee may object to a debtor’s Chapter 13 plan as proposed. A seasoned bankruptcy attorney may ensure that any objections by a trustee are minimized or avoided completely.
Many bankruptcy debtors have a choice between filing a Chapter 7 bankruptcy case and Chapter 13 bankruptcy case. There are many differences between the two chapters. An experienced Morrison Law Group attorney can help you determine which is best for your financial situation. Call 801.456.9933 today to schedule a FREE consultation and discuss your complete set of options. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.