Your Chapter 13 Plan
The Chapter 13 PLAN is the heart of a Chapter 13. You suggest to the Court how you will pay all or part of your bills, subject to certain rules of the Bankruptcy Code.
The Plan has to comply with the rules in the Bankruptcy Code. Some of the important ones include paying any income tax refund during the first 36 months into the Plan. Generally, you have to provide 100% of your disposable income during the first 36 months. Once the court approves the PLAN, you pay all the bills we put in the plan by making one payment to the Trustee. The Trustee usually has the payments deducted by your employer one or two times per month. Usually your legal fees will also be included so that your monthly payment includes them too.
What you Give
Your plan depends on your particular case. The law does not set a strict percent that everyone pays. Some people can only pay as little as 10% of what they owe to unsecured lenders. If someone has a mortgage, they are SECURED by that, so you have to either pay them outside the Plan or pay them the value of the security in the plan, with interest.
Generally, if you aren't paying 100% of unsecured debt, you have to pay whatever is left over after living expenses, for 36 months. But the exact PLAN can only be made after your attorney has all the facts on your case, including debts, what you own and what it costs you to live.
Your Plan must include 10% as a fee for the Trustee. It can also include the balance due of attorney fees for your case. Income Tax Refunds during the first 3 years are also paid in, unless the Plan is a 100% pay during the first 36 months.
If you own property free and clear, the Creditors must be paid the same value they would receive if they could have that sold. In the case of a residence, this value is reduced because the first fifteen thousand dollars of value is EXEMPT. But if you have other property, your Plan has to provide that amount of money equal to the value. The Code calls this the LIQUIDATION TEST.
In Chapter 13, you keep all your property and assets. The Trustee does not take anything. Sometimes your Plan, in addition to the monthly payments, may include sale of certain non_exempt assets to pay creditors, such as land. The Code requires your Plan to pay DISPOSABLE INCOME for at least 36 months as well as LIQUIDATION VALUE as described above.
You will be required to have filed Income Tax Returns for the last three years and you have to provide a copy of these to the Trustee. Also, during the first 36 months of the Plan the Trustee has the right to your refund in most cases, and you have to provide a copy of your tax returns.
Our office will help you meet these legal requirements if you decide to file Bankruptcy.
G. Paul Marx, A Professional Law Corporation
Chapter 13 Topics: TRUSTEE YOU GET YOU PAY THE PLAN
NEW LAW- OCTOBER 17, 2005 BANKRUPTCY REFORM ACT
THE U.S. Congress and President Bush have authorized us by law to state that as to our Bankruptcy Work at this Law Firm, WE ARE A DEBT RELIEF AGENCY. WE HELP PEOPLE FILE FOR BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE.