November 25, 2017

What Happens After Your Chapter 13 Plan is Confirmed?

When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.

In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.

While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan. [Read more…]

Budget Numbers that Apply to Your Case

One of the biggest changes in the new bankruptcy law has to do with the new approved budget figures now being used by the Bankruptcy Courts.  Previously, when I prepared a budget for a case filing, I spoke to my client, reviewed the budget shown on his questionnaire, tweaked it to get rid of any obvious problems and filed it.  As long as we were reasonable, there generally were no problems.

It does not work that way anymore.  Now, the definition of what is “reasonable” comes from the IRS.  These are the same IRS figures that are used in “Offer in Compromise” situations where the IRS is considering a reduction in tax debt.  In other words, the IRS standards are not particularly generous.

You can review the IRS standards at the U.S. Trustee’s web site or the web site for the Clerk of Bankruptcy Court, Northern District of Georgia.  You will notice that there are three different categories of approved budget figures:

– a national standard for allowable living expenses (food, clothing, personal care)

– a local standard based on the county where you live for housing and utilities

– a regional standard for transportation – Georgia is in the “south census” region

In addition the approved standards are updated approximately every 6 months, so before you file, ask your lawyer if the budget numbers are changing anytime soon.

All of these budget numbers are built into the computer program we use to prepare your bankruptcy.  The issues, of couse, arise when you are spending money for “unapproved” purposes, such as paying your child’s private school tuition or college tuition, paying for a child or parent’s car, paying for a home business, etc.

The Chapter 7 and Chapter 13 trustees are filing objections based on these budget figures and are leaving it to the Judges to figure out what is a reasonable deviation.

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