Free Consultation
The office is open as per the NYS Covid-19 guidelines. We are now doing both in-person and telephone consultations. Please call the office at 718-855-6840 to schedule a time to speak with one of our experienced bankruptcy attorneys.

Good Math Skills Needed When Amending a Chapter 13 Plan

New York bankruptcy lawyers aren’t always known for their math skills. In fact, there are many jokes about lawyers as liberal arts majors who can’t do math or science. The issue of lawyers and math, however, is quite serious in consumer bankruptcy, which can be “numbers intensive.” Unfortunately, easy math mistakes can plague a chapter 13 New York bankruptcy case—often to the point of dismissal.

Take this example: Debtor promises to pay $18,000 to the creditors over 60 months. That should be $300 per month, but sometimes the parties make mistakes and a plan that promises less is confirmed. It could be just a simple typo: $280 a month for 60 months to pay $18,000. No one realizes it’s wrong until they check the math.

But once the error is found, the trustee will demand the debtor amend the plan to cover the missing amount. If an amendment happens before the first payment is made (or if the debtor makes a technical overpayment), then it shouldn’t be much of a problem, assuming the debtor can afford the higher payments to begin with. If payments have already been made, though, then the entire plan will need to be recalculated—including compensating for prior payments.

A bankruptcy lawyer who isn’t good at math might simply multiply the numbers all over again, albeit correctly: $300 times 60 payments, but this won’t work. If the debtor made two $280 payments before anyone noticed the error, then the debtor will need to make up for the cumulative difference between the prior payments and the current one: $20 for two payments. These will need to be distributed across the remaining payments or paid up front to ensure the plan is on track. Overall, this comes out to $300.69 per month. Usually the debtor will round it up to the nearest $1, $5, or $10 to keep the numbers even.

In other words, when amending the plan, subtract the amount already paid from the amount promised and then divide by the number of remaining payments. Anything else will cause a mess, including possibly a default or a dismissal.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Chapter 13 Bankruptcy Lawyer Brooklyn NY Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

Beware Grace Periods, Debtors

Too often, debtors see grace periods offered by lenders as free benefits. “Grace” makes it sound so innocent. However, debtors who routinely rely on grace periods when making payments will find themselves facing financial difficulties that might lead to bankruptcy. The reason is that although creditors offer grace periods to debtors, they also use them

Read More »

Bankruptcy May Not Rescue You From Vicious Personal Disputes

Bankruptcy is a technical process that assumes everyone working within it is mostly rational. To the extent that it expects parties to deviate from irrational behavior, the Bankruptcy Code and its accompanying rules include incentives to keep parties in line. Creditors are usually large and impersonal, and they rarely care if their debtors file bankruptcy.

Read More »

Non-Lawyers’ Explanations of Bankruptcy May Be Wrong

Do you have financial problems? Do you tend to ask your friends for advice? Is one of your friends an experienced New York bankruptcy lawyer who will explain the process for you? Are your friends otherwise knowledgeable people? The answer to these questions may be, “Yes but you don’t know it.” Although many bankruptcy lawyers

Read More »

6 Steps to Take Before Filing Bankruptcy

Leaving your case to an experienced New York bankruptcy lawyer is not the only step on the to-do list before filing bankruptcy. There are many things debtors should do (and not do) before they file, and the more organized and mindful debtors are, the easier the process will be and the more effective the result.

Read More »

Social Security Number Not Necessary for Bankruptcy

A question that’s commonly asked about New York bankruptcy is whether a debtor needs a Social Security number to file. Debtors ask because they sometimes run across the bankruptcy form title, “Your Statement About Your Social Security Numbers” (B 121), which asks debtors to list their current and prior Social Security numbers. The new bankruptcy

Read More »

How Can a Debtor (or Creditor) Get a New Trustee?

The trustee in a New York bankruptcy case is usually not the debtor’s ally. His or her purpose is mainly to administer the bankruptcy estate or ensure the debtor’s repayment plan goes according to plan. Trustees pursue preference payments, fraudulent conveyances, and other malfeasance committed by debtors. They frequently initiate adversary proceedings against debtors. In

Read More »
Scroll to Top