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Making the Chapter 13 Repayment Plan Work

Posted by attorney Andrew Hawes

Making the Repayment Plan Work

The provisions of a confirmed plan bind the debtor and each creditor. 11 U.S.C. § 1327. The debtor must make regular payments to the trustee either directly or through payroll deduction. This will require adjustment to living on a fixed budget for a prolonged period. While confirmation of the plan entitles the debtor to retain property as long as payments are made, the debtor may not incur new debt without consulting the trustee. This is because additional debt may compromise the debtor's ability to complete the plan. 11 U.S.C. §§ 1305(c), 1322(a)(1), 1327.

Payroll deductions for payment of the debt may be recommended. This is because payroll deductions greatly increase the chance that payments will be made on time and that the debtor will complete the plan. If the debtor fails to make the payments due under the confirmed plan, the court may dismiss the case or convert it to a Chapter 7 Bankruptcy. 11 U.S.C. § 1307(c). The court may also dismiss or convert the debtor's case if the debtor fails to pay any post-filing domestic support obligations (i.e., child support, alimony), or fails to make required tax filings during the case. 11 U.S.C. §§ 1307(c) and (e), 1308, 521.

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