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The Feasibility of a Chapter 13 Plan

When you file a Chapter 13 case, your bankruptcy attorney will help you submit a plan of reorganization. The plan sets forth what your creditors will be paid over the course of your bankruptcy case.  Your plan must be "feasible" and the court must confirm or approve it. Feasibility is a term the court uses in determining whether or not your plan is likely to succeed. Your creditors file a proof of claim with the court. Each claim sets forth how much the creditor is owed. It also lists any assets pledged as collateral to the lender. The trustee reviews the claims to determine how much money the debtor must pay in order to fund the plan. The Chapter 13 plan must pay priority and secured claims, legal fees, trustee's fees, and anywhere from 0-100% of the unsecured claims. The "base" for the plan is the total amount to be paid under the debtor for three to five years.  A simplified example is if the debtor pays $100 per month to the trustee for a period of 3 years, the plan base is $3600. The Chapter 13 trustee verifies that the base amount is sufficient to pay the amount required to be made to creditors.    If it is, the plan is feasible.  The plan is infeasible if the amount required to be paid to creditors exceeds the the base amount. What happens if the plan is infeasible? Your attorney can help you amend the plan to make it feasible. Common ways to make a plan feasible include extending the length of the plan or increasing the amount of the monthly payment. If you are interested in learning more about Chapter 13 bankruptcy, contact Levitt & Slafkes to schedule your initial consultation. If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, PC, at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.

 

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