There is also another chapter under the Bankruptcy Code that is typically used by consumers, and that is Chapter 13 bankruptcy. As a Berwyn bankruptcy attorney, I like to describe Chapter 13 bankruptcy as bill consolidation or bill reorganization through the court. A Chapter 13 trustee is appointed by the court to administer the payments that are made by a Chapter 13 debtor. The case involves the filing of a petition just like in a Chapter 7 case; however, there is an additional item called the “Chapter 13 plan.” The Chapter 13 plan is the legal document which tells the trustee how much the debtor is going to pay per month, over what duration of time, to which creditors, and to how the bankruptcy Chapter 13 trustee is to make monthly disbursements to those creditors. This plan has to be approved by the court, and this plan has to be sent on notice to all creditors and all parties of interest.
Approximately four to six weeks after a Chapter 13 bankruptcy case is filed, a debtor will appear at a 341 meeting of creditors. At the 341 meeting of creditors, the debtor, the debtor’s attorney, and the trustee or a representative from the trustee’s office will meet and examine the information provided for in the debtor’s petition under oath. The trustee will ask the debtor about their income, their expenses, their assets and their liabilities. The trustee wants to make sure that the debtor is putting all of his disposable income into the Chapter 13 repayment plan. One of the requirements of an Illinois bankruptcy case under Chapter 13 is that the debtor put all of his disposable income into the Chapter 13 reorganization plan. A debtor does not have the ability to pay whatever he wants into a Chapter 13 plan. The trustee’s job is to make sure that the debtor is putting exactly what is required under the law toward the Chapter 13, which will eventually be paid pro rata, or to creditors pursuant to the terms of a confirmed Chapter 13 plan.
Shortly after the 341 meeting of creditors date, there will be a confirmation hearing before the judge. At this confirmation hearing, the trustee and the debtor’s attorney will appear before the bankruptcy judge to determine whether or not the plan filed by the debtor is confirmable. Sometimes the trustee wants modifications made to the plan such as an increase in the dollar amount or a step plan where the payment plan will increase after a certain number of months. In other cases, a creditor can object to the plan, alleging that the treatment is either improper or that the payment amount is not proper. Your Chapter 13 bankruptcy lawyer will do whatever possible to see that your case is confirmed. Once the case is confirmed, it is solid.