For those who choose to file in Chapter 13, getting the repayment plan confirmed is usually a big event because it starts the clock on their three- to five-year repayment plans. The question they often ask is, “What happens next?” There are a few things, large and small.
One, the debtors choose the payment system, either by electronic transfers or through certified funds. At this point, for the most part, the bankruptcy lawyer’s work is done, unless a creditor violates the automatic stay or there’s a change in the debtor’s financial situation that necessitates amending the plan or refiling the case in Chapter 7.
Trustees will have received a copy of debtors’ income tax returns, and debtors must submit them each year after the plans receive confirmation, so long as their cases are still open. Trustees use them to compare debtors’ declared incomes on their recent returns to what the debtors listed in their bankruptcy schedules. As debtors’ incomes increase, trustees are more willing to move the bankruptcy court to amend the repayment plan and increase payments to the creditors. Not all increases in incomes will cause a trustee to do this, but when a debtor’s income grows by about 10 percent, then the trustee will become interested in increasing the payments. When debtors’ incomes drop, the trustee will look to see if they are due a refund, but if the plan is not a 100 percent repayment plan, the trustee will keep the refund for the bankruptcy estate.
Beyond these formalities, debtors’ remaining obligations are to just make the payments. Finishing a Chapter 13 plan requires some discipline and lifestyle changes. An important, if possibly counterintuitive thing to do, is to save money while paying the trustee, if possible. Creating a cushion of savings for an emergency can greatly help keep debtors from missing payments. Often this means curtailing all other spending, such as on restaurants, vacations, and other costs.
Finally, debtors are required to complete a financial management course post-filing. Some of these cost more than others, but they aren’t particularly burdensome.
Most of Chapter 13 boils down to making the payments to get to the discharge or lien-stripping, or whatever the debtor’s goal is.
For more questions about Chapter 13 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.
