Skip to main content

Search

Consumer Bankruptcy Law and Practice: 8.7.1 Trustee Payments to Creditors

Once the chapter 13 plan has been confirmed, the trustee usually takes over the administrative details. Although the debtor may have been making payments for some time, no distribution is made until after confirmation unless the trustee has been distributing adequate protection payments. If the time for filing claims has not yet elapsed,250 there may be further delays before all claims are determined and allowed. In the interim, objections to other claims, as well as other disputes that arise, may be litigated.

Consumer Bankruptcy Law and Practice: 8.7.2 Postpetition Claims

Once distribution has begun, events normally flow smoothly for the duration of the plan, with the debtor or the debtor’s employer258 sending payments regularly to the trustee for distribution. The Code provides for incorporation of certain postpetition claims (debts incurred after the petition) into the plan;259 however, such debts may also be paid outside the plan.

Consumer Bankruptcy Law and Practice: 8.7.4 Orders Declaring Secured Claim Satisfied and Lien Released

If the debtor’s chapter 13 plan provides for modification of a secured claim, the debtor may have obtained a determination of the value of the secured claim.278 Any determination of the secured claim amount made through confirmation of the plan is binding on the creditor, even if the creditor files a proof of claim in a different amount and no objection to the claim is filed.279 Upon completion of the chapter 13 plan or payment of the creditor’s allowed secured claim, the debtor may request unde

Consumer Bankruptcy Law and Practice: 8.7.5 Modification of the Plan

Debtors often need to modify their plans after confirmation, either to raise payments to accommodate postpetition claims or to lower the payments because the debtor has had a change of circumstances. One such change of circumstances may occur if the debtor loses use of a car that serves as collateral for a secured claim being paid under the plan, through its destruction, repossession, inoperability, or other cause, or if the debtor no longer needs the vehicle.

Consumer Bankruptcy Law and Practice: 8.7.6.2 Plan Modifications That Enable the Debtor to Complete the Plan

The most preferable option when addressing a problem in completing the plan is often modification, following the procedure described above.310 Modification may allow the chapter 13 plan to proceed to conclusion by lowering the payments to a level the debtor can afford or by extending the payments, provided that the extension does not exceed the maximum sixty-month plan term.311 It may also be possible to modify the plan to terminate earlier than originally proposed.

Consumer Bankruptcy Law and Practice: 8.7.6.5 Dismissal

A final option is dismissal, also available to a chapter 13 debtor as of right in any case not previously converted from another chapter.324 Pursuant to Federal Rule of Bankruptcy Procedure 1017(d), the debtor may obtain a voluntary dismissal by filing a motion stating the debtor’s entitlement to dismissal. An involuntary dismissal may also occur on motion of the chapter 13 trustee, the United States trustee, or a creditor.

Consumer Bankruptcy Law and Practice: 8.8.1 Overview

Once the time for objecting to a discharge has passed in a chapter 7 case and proof of the debtor’s completion of a financial education course has been filed, with a few limited exceptions, the debtor is entitled to a discharge.331

Consumer Bankruptcy Law and Practice: 8.8.2 Reaffirmation of Debts

The principal stated purpose of the discharge hearing is to advise debtors of their rights, especially with regard to reaffirmation of debts. In a well-handled case, this counsel should already have been provided by the debtor’s attorney. Without doubt, the best advice in this regard is simply that reaffirmation is rarely a good idea.

Consumer Bankruptcy Law and Practice: 8.8.3 Procedure When There Is a Discharge Hearing

If the court decides to have a discharge hearing even though there will be no reaffirmation of debts, the discharge hearing is usually a very brief affair, with nothing to be said by the debtor or the debtor’s counsel. In fact, in many jurisdictions, debtors’ counsel are not required to attend the hearing in such cases. The court usually warns the debtor about creditors trying to collect their debts or obtain reaffirmations in the future, and lets the debtor know that bankruptcy is a serious business.

Consumer Bankruptcy Law and Practice: 8.9 After Discharge

Once the discharge has been granted and all related litigation has ended, one or two steps normally remain to be taken in representing the debtor. These final details may be quite important in particular cases and should not be neglected.

Consumer Bankruptcy Law and Practice: 8.1 Introduction

Once the decision to file a bankruptcy has been made and acted upon by commencement of the case, the remainder of many a routine bankruptcy case seems anticlimactic. Although numerous complications can occur, and significant steps must sometimes be taken on behalf of the debtor, quite often only a few formalities are left after the filing of the initial papers. This Chapter describes those events that occur in every case, and also how to handle some of the other proceedings that may arise during the pendency of the case.

Consumer Bankruptcy Law and Practice: 8.3.1 Notice of the Automatic Stay and Turnover Requirement

Although all creditors should receive a notice of the automatic stay as part of the notice of the meeting of creditors, that notice may not be sufficient to protect the debtor’s rights. It may not be mailed until weeks after the petition is filed; in the meantime, creditors without notice might take action harmful to the debtor. A creditor without notice of the case will normally not be found to have willfully violated a stay it knew nothing about.

Consumer Bankruptcy Law and Practice: 8.3.3 Personal Financial Management Course

To receive a discharge in a chapter 7 or chapter 13 case, the debtor must, with limited exceptions, submit proof of completion of an instructional course concerning financial management.43 The Bankruptcy Rules provide that the certification of course completion is to be submitted by the debtor using Official Form 423.44 However, the debtor need not file a certificate of completion of the course if the course provider has notified the court of the completion, as will occur in most cases.

Consumer Bankruptcy Law and Practice: 8.3.5 Annual Statements of Income and Expenditures in Chapter 13 Cases

A chapter 13 debtor may also be required to file annual statements of income and expenditures, but only if they are requested by the court, the United States trustee, or a party in interest.80 While some trustees make such requests as a matter of course, the language of section 521(f) suggests that requests are only appropriate if there is a particularized need for the information in a specific case.81 Otherwise, the statute would have simpl