The Chapter 13 plan is what is prepared, signed by you, and filed by your Minooka bankruptcy attorney, which governs how much you are going to pay per month and who is going to get paid. The Chapter 13 bankruptcy trustee is the person who is actually the administrator of the payment plan. Think of the Chapter 13 trustee as a dealer in poker. Each month you make a payment to the Chapter 13 trustee, the trustee is going to divvy out to all of your creditors, either in a pro rata share or according to a Bankruptcy Code hierarchy, a portion of the debt. So just like a dealer in poker, when you file Chapter 13 bankruptcy, the Chapter 13 trustee is going to be dishing out your payment plan to your creditors pursuant to your plan.
Now, to get the plan approved, your case has to be confirmed. Just filing a Chapter 13 bankruptcy case does not make it solid. Four weeks after you file bankruptcy, you will meet with a Chapter 13 trustee at a meeting known as the 341 meeting of creditors. At this meeting, the trustee will ask you a series of yes/no questions based on your assets, your liabilities, your income, and your expenses, and your debt. The trustee will inquire as to where you’re working and how much you’re making. The trustee is going to want to see two months’ worth of paycheck stubs. The trustee is going to want to see four years of federal tax returns. The trustee’s job is to make sure that you are putting in all of your disposable income toward your Chapter 13 plan payment. That is the Chapter 13 trustee’s main function other than to administer the plan, is to make sure that you are following the requirements of the Bankruptcy Code and that you are putting all of your disposable income toward your Chapter 13 plan. Your Illinois bankruptcy lawyer will help you to satisfy the trustee’s requests.
Now, some people think, “Well, we only have to pay 10¢ on the dollar.” This is not necessarily the case. The amount that you pay back to unsecured creditors has a great deal to do with what you are making per month. If you are over the median – in other words, if you make more than the average person in your state for your family household size – then you are required to pay back at least five years’ worth of monthly payments. Now, it may turn out that five years of monthly payments equates to ten percent of your unsecured debt. However, in most cases, if you’re going over the 36-month plan payment timeframe, you are likely going to be paying more than 10 percent on the dollar. Do not let the percentage amount cloud your question of should I file for bankruptcy?