If the debtor completes the Chapter 13 bankruptcy case and a creditor from an unsecured debt has not filed a proof of claim, then that debt is eliminated. This is a great savings to the debtor and a good result being provided by an IndianHeadPark bankruptcy attorney. If a debtor comes to me with 30 different creditors and a lot of them are medical bills and credit cards and personal loans, I know that not every one of those 30 creditors are going to file a proof of claim. I know that if the debtor finishes his case, he is going to get the benefit of and eliminating in full whichever unsecured debts did not file proof of claim bankruptcy.
What’s difficult about this is that in order for the debt to be eliminated under that situation under Chapter 13 bankruptcy law, the debtor must complete the Chapter 13 case and it must go to a discharge. Now, remember we talked about Chapter 7 as one court date and then approximately 120 days from start to finish? The exact opposite occurs under Chapter 13. Under Chapter 13, it can last anywhere from 3 to 5 years and that’s a long time to make a timely monthly payment to a Chapter 13 trustee of all of your disposable income per month. Now, the trustee is going to make sure that you are paying all of your disposable income per month because they are going to scrutinize your budget. They are going to look at your income. They are going to look at your expenses. They are going to look at what you are deducting for taxes and whether or not you are getting a tax refund. They are going to make sure that every single dollar that is disposable that is not properly budgeted is going to be part of your bankruptcy Chapter 13 plan for the benefit of creditors.
Now this is where your attorney and you will appear before the trustee and answer questions under oath regarding your petition, your schedules, your statement of financial affairs and your entire financial package. The trustee may and often does want proof of certain documentation; whether or not you have tithing expenses, whether you have significant medical expenses above and beyond the norm that you have to document. In some cases, clients have high utility bills and the trustee wants to see whether or not those are actually valid or whether the numbers are being inflated on the schedule. Your bankruptcy lawyer will be able to assist you in providing the information to the trustee.