A Chapter 13 bankruptcy reorganizes your debt by allowing you to pay creditors some or all of what you owe through a three- to five-year repayment plan. The Chapter 13 bankruptcy trustee appointed to your case oversees the administration of the plan.
Some of the many duties performed by the trustee include:
(For an overview, review Chapter 13 Bankruptcy.)
Your proposed repayment plan outlines how you intend to repay your creditors some or all of what you owe. One of the trustee’s tasks is to make sure that your Chapter 13 repayment plan is fair to your creditors.
The bankruptcy trustee starts by reviewing the official bankruptcy forms filed at the beginning of the case. The trustee will verify your information by comparing the figures provided on the official forms to those in additional documents you’ll send to the trustee shortly after filing.
The petition and schedules include information about your income, monthly expenses, assets, and debts. You can also expect to produce tax returns, paycheck stubs, bank statements, and other items required by the particular trustee.
About a month after filing your case, you’ll go to a 341 meeting of creditors administered by the Chapter 13 trustee. You’ll answer questions under oath about the information in your bankruptcy paperwork and plan, as well as your supporting documents. Specifically, you can expect to field questions regarding your income, assets, or any other information relevant to your bankruptcy.
The trustee will continue the meeting to another date if more documentation is needed. Otherwise, the trustee will conclude the meeting.
(Learn more in Meeting of Creditors: Common Bankruptcy Trustee Questions.)
A trustee might find a problem with your plan and object to its confirmation (court approval). You’ll have a short period to correct the issue or draft an opposition in support of the plan. The trustee will attend the confirmation hearing and tell the judge whether the trustee believes the plan is feasible (meets all requirements). The judge will decide whether to confirm (approve) or reject the plan.
Within 30 days of filing your Chapter 13 case, you must begin sending monthly payments to the bankruptcy trustee according to your proposed plan. Until the court approves your repayment plan, it remains proposed and the trustee holds the funds in trust for your creditors. After court approval, the Chapter 13 trustee begins distributing the funds to your creditors under the plan terms.
It takes three to five years to complete a Chapter 13 plan. During that time, the trustee will continue receiving your payments and paying them to your creditors until you finish the plan. During this time, the trustee must also keep an accounting of all funds received and how much has been paid out to each creditor.
Creditors must file a "proof of claim" with the court within 70 days of the filing date (government creditors have 180 days). The proof of claim states the amount that you owe the creditor and has attached to it certain required documentation. The Chapter 13 trustee reviews the creditor claims and objects to any improperly filed claims or claims lacking the correct documentation.
(Learn more by reading Objecting to a Proof of Claim in Bankruptcy.)