RSS FeedCongratulations! Your Chapter 13 Plan has been confirmed and the Order of Confirmation sets forth the terms of your trustee plan payments. What happens next? Well, a lot can happen over the 3 or 5 years you’ll remain in bankruptcy and making those trustee payments.
You now have the option of setting up electronic payments to the trustee, instead of certified funds. Every year, you will need to provide your attorney with a copy of your filed tax returns. You’ll also want to stay in communication with your attorney should your financial situation change to where you can no longer afford your plan payments.
Every year, the trustee will review and analyze your tax returns in comparison to your income and expenses you reported in your bankruptcy papers to determine whether they will ask the court to increase your plan payments. So, I understand that generally, they will ask for increased payments when your income has increased to the point where your disposable income increases by 10% as their margin. Don’t quote me on this, I have only heard this from one trustee here in the Central District; it’s not a hard and fast rule.
With a 60% success rate of getting to your discharge, you need to be ever mindful of your budget and expenses. It takes approximately 18 months of living within the fairly strict budgeting of a chapter 13 case to really gain solid financial ground. Watch your expenses and you’ll make it to the end.
Getting a discharge is especially important in Chapter 13 cases where you’re seeking to avoid a junior mortgage lien on your home. That’s because the lien will not be removed from your property until your case is discharged. This is the dangling carrot that propels many a debtor to complete their Chapter 13 plans. While there is some case law to support lien avoidance if you convert your case to Chapter 7, the courts are split on this issue.
Lastly, you MUST complete a post-filing financial management course. There are many court approved courses that you can take and some attorneys will even pay for this course for their clients. My favorite is Dave Ramsey, but there are other, less expensive courses you could take. If you have followed your attorney’s advice and made all of your plan payments, your Chapter 13 Discharge and financial fresh start is well deserved.
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