Chapter 13 Bankruptcy Trustee Information

Enabling individuals with regular income to develop a plan to repay all or part of their debts, a chapter 13 bankruptcy is also called a wage earner’s plan. Also, there has to be kept in mind that debtors propose a repayment plan to make installments to creditors over three to five years, under a chapter 13 bankruptcy payment plan.

The plan will be for three years unless the court approves a longer period “for cause”, if the debtor’s current monthly income is less than the applicable state median. The plan generally must be for five years, if the debtor’s current monthly income is greater than the applicable state median.

Payments over a period longer than five years are not being provided by any plan. During the established period of time for paying off debts under a chapter 13 bankruptcy, creditors are being forbidden from starting or continuing collection efforts.

An important aspect which has to be taken into consideration is being represented by the fact that chapter 13 acts like a consolidation loan. Under chapter 13, the debtor makes the plan payments to a chapter 13 bankruptcy trustee. Then, the chapter 13 bankruptcy trustee distributes payments to creditors. Also, there has to be kept in mind that, while under chapter 13 protection, individuals will have no direct contact with creditors.

A copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case must be provided by the debtor to the chapter 13 bankruptcy trustee. Also, there has to be paid attention to the fact that, regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing, married individuals must gather this information for their spouse.

The income and expenses of the non-filing spouse is required, in situations where only one spouse files. In this way, the chapter 13 bankruptcy trustee and creditors can evaluate the household’s financial position.