Motion/Order to Raise Plan Percentage filed by your Trustee

Our office receives calls from clients in a panic from time to time when they receive one of these Motions and Orders. And understandably so.  Your initial reaction is “I can’t raise my plan payment.  I am already stretched to the limit.” Relax, your plan payment is not being raised.  What is being raised is the percentage of debt being repaid to your creditors who filed a claim to be paid in your Chapter 13 Plan.

This is purely an administrative matter by the Trustee.  Your creditors have a deadline to file a claim to be paid in your bankruptcy.  After the deadline, the Trustee reviews your case and pays only those creditors who actually filed a claim.  The plan as originally filed may have stated that the intention was to pay the unsecured creditors approximately 10% of the balance owed at the time of filing of the case.  However, after all the creditors that filed claims are determined, it appears that your regular payment will end up paying these creditors 25% of what is owed by the end of your plan. For bookkeeping reasons, the Trustee will file a Motion and Proposed Order which raises the percentage paid to unsecured creditors to 25%.  It is a simple matter and does not affect the amount of your payment.

Creditors who do not file a claim and were notified of the bankruptcy are not paid within the bankruptcy and will be discharged at the end of the plan even though they received no money. They have given up their right to collect the debt and cannot later make you pay them because they did not get paid in the bankruptcy.

Comments