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:
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:
The petition and schedules include information about your income, monthly expenses, assets, and debts. The trustee will use your tax returns, paycheck stubs, bank statements, and other items you'll be required by your particular trustee to submit to confirm your financial disclosures.
About a month after filing your case, you'll go to a Chapter 13 meeting of creditors administered by the Chapter 13 trustee. You'll answer the trustee's questions under oath about the information in your bankruptcy paperwork and plan, as well as your supporting documents.
You can expect to field questions regarding your income, assets, or any other information relevant to your bankruptcy. Your creditors will also have an opportunity to ask questions.
The trustee will continue the meeting to another date if more documentation is needed. Otherwise, the trustee will conclude the meeting.
A trustee (or a creditor) 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. The trustee must evaluate the proof of claim forms filed by each creditor and keep an accounting of all funds received and how much has been paid to each creditor.
Creditors who want to receive Chapter 13 funds 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 owed to the creditor and includes documentation in the form of a contract or agreement.
The Chapter 13 trustee reviews the creditor claims and objects to any improperly filed claims or claims lacking the correct documentation. Other parties can object, as well. Learn more by reading Objecting to a Proof of Claim in Bankruptcy.