Original Plan
When a chapter 13 bankruptcy case is filed, an original plan is also filed with the court. The original plan is put forward to notify creditors, the trustee, and the court as to how the debtor proposes to repay creditors over a three to five-year period. The original plan is not likely to be the plan that actually gets confirmed by the court. There may be several amendments to the plan and schedules before a case is actually in a position to be confirmed. In a recent case, the plan and the schedules were amended nearly a dozen times prior to confirmation. We do whatever it takes when amending the Chapter 13 plan for confirmation. The amended documents must be filed with the Clerk of The United States Bankruptcy Court.
Trouble With Amendments
The issue with amending the plan so many times is that it raises the issue of bad faith with regard to the actual schedules. For example, the debtor is to submit schedule I which is income, and schedule J which is expenses. These two schedules will dictate what the debtor has available per month to go towards the repayment of creditors. Since this figure is what is required to be paid each month, the dollar amount is going to have a drastic effect on how much the debtor pays over a 60 month period. If the debtor is paying a 100% repayment plan, then there is a little more leeway in terms of the expenses allowed. If, however, the budget is tight, then the dollar amount available per month is going to be very critical in terms of confirmation issues.
Recent Case
In a recent case, the chapter 13 plan was amended over six times. Each time a plan is amended, notice gets sent to all the creditors, the trustee, and the debtor. Each time a plan is amended, the trustee must examine and review the plan for confirmation and feasibility. As the plan vacillates back and forth in terms of dollar amounts, the trustee can raise the issue of bad faith in that the debtor is not filing legitimate documents from the outset. The trustee can argue that the debtor is trying to manipulate the bankruptcy system by amending the plan to provide for a lower plan payment than what was previously submitted. This could lead to a non-confirmable plan issue by way of bad faith.
My Recommendation
My recommendation is to file your plan with as much detail as possible from the outset. This way you can avoid the bad faith argument that could be made by the trustee when the plan has to be amended time and time again. The debtors obviously want to pay as little as possible into the chapter 13. The trustee and the creditors want as much as possible under the law being paid towards a chapter 13 repayment plan. My job as a debtor’s attorneys is to make sure that the documents are accurate, that the plan filed is in good faith and that it complies with all the different provisions of the United States Bankruptcy Code. By having as much information as possible from the outset, I can ensure that the information is true and accurate and that the plan is reasonable. In some cases, the plan has to be amended due to circumstances outside of my control. Sometimes a claim comes in at much higher than expected. Sometimes the debtor’s income is higher than expected or lower-than-expected in some cases. In any event, it is always best to have detailed information from the outset so that you can file the best plan possible.
Contact The Office
If you are thinking about chapter 13 and are wondering what you would have to pay to the court each month, give my office a call for an initial consultation and review. I can give you a general ballpark idea of what you would be paying to a chapter 13 trustee and for how many months. You can contact me directly at 847-520-8100. I have offices in Chicago, Westchester, Aurora, Joliet, Waukegan, Wheeling, and Chicago South.
