How Does a Bankruptcy Trustee Manage Your Chapter 13 Plan?

For payments paid into the plan, the Trustee serves as the disbursing agent. The Trustee also evaluates the plan and challenges those that do not, in the Trustee’s opinion, fulfill the Bankruptcy Code’s criteria for confirmable plans. Most of the Trustee’s objections will be foreseen by an experienced bankruptcy attorney, who will address them in the plan, amended plan, or modified plan (this is filed after the Court confirms the plan).  If the Trustee and the debtor cannot agree on the parameters of the plan, the  judge makes the final determination.

Once the plan is approved, the trustee pays creditors on a regular basis using the debtor’s payments. Before the Plan is finalized, the Trustee is allowed/required to make adequate protection payments. These would be payments to your vehicle’s lender, for example. §1326(a) (1)(B) All debts owed at the start of the case must be paid through the trustee, with the exception of current mortgage payments and some leases.

Surviving in Chapter 13: A debtor’s limits or criteria in Chapter 13 are as follows:

• Make all plan payments on schedule; keep up with your mortgage payments, as well as any car payments that aren’t included in the plan.
• Early in your Plan term, take the mandatory Personal Financial Management class.
• You cannot miss any payments if you owe child support or alimony/maintenance. All such payments must be current by the conclusion of the plan period.
• Otherwise, the Court will not grant a discharge unless the Debtor files a certificate stating that these obligations are current.
• During the plan term, do not fall behind on new tax obligations.
• Don’t take on any new debt without first getting permission from the court.
• Maintain current insurance on any asset that is being used as collateral for a loan.
• Changes in income should be reported to the Trustee.
• Annual tax returns should be provided to the Trustee.
• The debtor is free to move or change occupations, but they must notify their attorney and the Trustee of any changes in their income.
• Obtaining a new vehicle loan, forming a business that is an asset of the estate, or refinancing, selling, or purchasing a home all require court approval. It may take 30-45 days to receive such approval.
• There will also be extra responsibilities, which your attorney will explain.