HOW DO YOU DETERMINE THE AMOUNT OF MY TRUSTEE PAYMENT IN A CHAPTER 13 CASE?
A Chapter 13 case can get very complicated since many of Mr. Taieb’s clients don’t understand how their trustee payment is determined. In certain respects you may be able to limit the amount you pay to unsecured creditors, but if you are doing an arrearage cure or paying a secured creditor over the life of the plan your numbers are controlled by the amount in the creditor’s proof of claim.
In every case you propose a payment to a bankruptcy trustee. However, if you claim you owe $10,000 in arrears to the mortgage company and the bank files a proof of claim that you owe $12,000, your trustee payment will increase to cover the bank’s claim. That is not controlled by how much you can afford, which causes many clients distress. The only way to avoid that situation is to file a loan modification plan which is a lot more precarious since if the loan modification never goes through then you will have to modify the plan to surrender the home, or pay back the arrearage claim
Another way your trustee payment is impacted is based on your non-exempt equity in your property. If you have property that exceeds the exemptions and would be sold in a Chapter 7, then you don’t lose the property in Chapter 13 but the value of your non-exempt or unprotected property has to be paid to your unsecured creditors. Thus, in certain circumstances you may be in a very tight financial situation.
The last way that your trustee payment is determined is by your disposable income with respect to general unsecured creditors. If you are above the median income, what you pay to general unsecured creditors will be determined by the means test. Thus, if you are above median income, what you pay to general unsecured creditors is determined by your Form 122-C, which is based on your income over the last 6 months and deductions based on the IRS guidelines. The other way it is determined how much you pay to general unsecured creditors is based on your income and expense statements, which is based on the proof of income you provide.
Thus, when TAIEBLAW prepares a plan, it is always an estimated payment until the plan is confirmed. Even after it is confirmed, the trustee may ask for an updated income and expense statement each year. However, unless income has substantially increased, it is unlikely the payment for the confirmed plan will increase.
If you have any questions concerning this matter or any other matter, feel free to contact me at 856-235-4994.
Steven N. Taieb, Esq. is here to help you and is a South Jersey Bankruptcy Attorney who has helped over 7000 people with their financial problems for the past 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
We are more than happy to discuss all your options and to see if bankruptcy is the best option for you.