When a person files for Chapter 13 bankruptcy, they are essentially requesting the court for permission to devise a feasible, reduced payment plan to pay off their debts. The issue is that not everyone will be satisfied with the outcome. The bankruptcy court wants to ensure that the debtor can afford the proposed payment plan and that it does not leave them up for failure. Typically, the bankruptcy attorney submits a feasible plan to the court. Once the plan is confirmed, the debtor will be required to make payments to the Chapter 13 trustee for three to five years, depending on what was deemed affordable and approved.
The Chapter 13 bankruptcy affirmation order specifies the debtor's payment amount, duration, and percentage allocated to unsecured creditors. After creditors submit a proof of claim, the Chapter 13 trustee can determine how much money is required to pay off the claims under the plan. Priority will be given to secured claims, such as real estate, legal fees, and the trustee's own compensation.
After reviewing all the numbers, the Chapter 13 trustee will determine whether the debtor's proposed bankruptcy plan is even feasible. If the trustee believes it is impossible, the debtor should promptly contact their bankruptcy attorney to determine what can be done. Doing nothing will result in the dismissal of the bankruptcy petition.
Here is where a bankruptcy attorney will make his or her living. They understand how to address the feasibility issue. One option would be to increase the monthly payments to the bankruptcy trustee or offer a large sum during the bankruptcy plan's duration. Alternately, the bankruptcy attorney could file a motion to modify the amount paid to unsecured creditors. In many instances, this will lengthen the plan if it is not already five years.
Utilize the counsel of your bankruptcy attorney when interacting with the bankruptcy trustee, and approach the matter head-on. Failure to cooperate with the trustee will result in the dismissal of your bankruptcy petition. If that occurs, it will be a waste of time and you will likely be in a worse position than before.""
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