The Chapter 13 bankruptcy trustee appointed to your case oversees the administration of the plan. In this article, we’ll list down the tasks of a trustee and how payment is carried out.
Chapter 13 in Brief
Among the different types of bankruptcy, Chapter 13 is also known as reorganization bankruptcy, or the wage earner’s plan. Under this bankruptcy chapter, you can keep your property and prevent foreclosure.
Individuals with regular income develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. When you file for bankruptcy, bankruptcy court places an automatic stay, preventing further collection attempts. After the payment plan, dischargeable debts will be discharged.
To help in your decision to declare bankruptcy, it’s best to consult with bankruptcy lawyers.
Duties of a Chapter 13 trustee
Review the paperwork and repayment plan
One of the trustee’s tasks is to ensure that the repayment plan is fair to your creditors.
The trustee will require you to submit certain documents like bank statements, paycheck stubs, and tax returns to confirm your financial disclosures. They will review these documents along with your bankruptcy petition.
Conduct the Meeting of Creditors
The Chapter 13 trustee administers a meeting of creditors around a month after the bankruptcy filing.
The trustee will be asking questions regarding the plan and the paperwork, your assets, income, and other relevant information. The creditors may also ask questions.
Attend the Confirmation Hearing
If a lender or trustee takes issue with your plan, you’ll have a period to correct it or draft an opposition supporting the plan.
The trustee attends the confirmation hearing to tell the judge if they believe that the plan is possible. It’s the judge who rejects or approves the plan.
Administer the Bankruptcy Repayment Plan
Within 30 days from your bankruptcy filing, you must start paying the bankruptcy trustee according to the proposed plan. It remains a proposal until court approval. In the meantime, the trustee holds the funds for the debtor. When it’s approved, the trustee distributes it to your creditors.
During the time of your repayment plan, the trustee will keep making the payments and distributing them to pay off the amount owed. They must take account of all the payments made.
Object to Improper Creditor Claims
Creditors must provide proof of claim if they want to receive Chapter 13 funds. The proof must state the amount owed and documentation of the agreement.
How to Pay the Chapter 13 Trustee
As mentioned, even before approval, you must make payments to your trustee after filing for bankruptcy.
Once you know the trustee’s name, check their website for payment instructions. If the creditor’s meeting is scheduled for less than a month after filing, the trustee will probably explain how payments work then.
Once the plan is approved, you’ll be making payments as stated in the plan. You are to continue to mail the payments. Alternatively, a wage deduction order may be made to deduct from your paycheck to pay off your plan. Discuss with a bankruptcy lawyer to know exactly what will happen.
How the Chapter 13 Trustee Pays Your Creditors
Initial payments are usually just the attorney fees and secured claims, like car loans and mortgage payments, until the court signs the confirmation.
After the approval, payments made will include unsecured creditors – medical bills, credit card balances, and personal loans.
Ensure that Creditors Receive Trustee Bankruptcy Payments
Most trustees have a website where you can keep track of the accounting of payments you make to the trustee and its distribution to lenders.
Bankruptcy can impact your credit score. Our bankruptcy attorneys work with you using our proven credit repair system. Get the fresh start you and your family deserve and seek help from lawyers knowledgeable about bankruptcy law. Contact Vancouver WA Chapter 13 bankruptcy attorney Tom McAvity today by calling Northwest Debt Relief Law Firm to file bankruptcy.