One of the more puzzling aspects of Chapter 13 bankruptcy for folks who've never filed before is the seemingly open-ended nature of restructuring plans. The law requires you and your Chapter 13 bankruptcy attorney to present a plan in good faith that doesn't take advantage of the system. At the same time, you don't want to present a plan that might leave you short of the goal at the end of the three to five years you'll likely have to pay.
How aggressive can you make your plan? Here are three things folks in the Chapter 13 bankruptcy lawyer services world may tell you about this topic.
Creditors and the Court Will Have Their Say
A judge will appoint a trustee, a person who usually either has a background in accounting or is a Chapter 13 bankruptcy lawyer. This individual's job is to ensure that whatever plan eventually goes before the judge protects the interests of the creditors.
Even if the trustee approves your plan, your creditors will also have a chance to express reservations about the plan. They can even ask the court to put you under oath so they can inquire about the plan and the state of your finances.
Protecting Your Interests
Where the confusion in this process often enters is that petitioners also need to submit plans that won't send them back to court in a couple of years seeking a full Chapter 7 discharge of their debts. You need to ensure that your interests are protected by advancing a plan that will get you out of debt. As it sounds, that can be a tricky balancing act, and it's one of the strongest reasons to ask a Chapter 13 bankruptcy attorney for guidance. A professionally composed plan is less likely to be rejected or modified.
Good Faith
At the core of this balancing act is the legal notion of good faith. In theory, you could ask the court to wipe out the entirety of your debts in Chapter 13 bankruptcy. However, there aren't going to be a lot of judges who'd humor such a proposed plan. A judge would likely tell you to resubmit with a Chapter 7 petition.
What does it mean to propose a plan in good faith, though? If your math says you can afford to pay 80% of the debts you owe, you should propose paying that percentage in the plan. The goal is to save your financial future without taking a chance that you'll fail to pay the planned amount in full.
For more information, reach out to a Chapter 13 bankruptcy lawyer.
Share21 October 2020
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