Variations In Income
Chapter 13 bankruptcy includes a debtor's plan, which is the court-outlined repayment plan. This plan determines how much a debtor must pay the trustee each month to settle their debts. One of the most prevalent misconceptions associated with this is that any additional income will inevitably increase the amount the debtor must repay. In a Chapter 13 case, a change in the debtor's income may result in a modification of the plan's repayment amount, but there is no assurance that an increase in funds will result in the debtor paying more.
For instance, if a debtor inherits money after their debtor's plan has been established, the court would consider the amount to be additional income. However, whether the inheritance funds are sufficient to increase payments is at the bankruptcy court's discretion. Tax refunds are also a point of contention in a Chapter 13 case, but the majority of debtors are permitted to retain the lesser of $600 or two months' worth of plan payments. In contrast, funds such as retirement benefits, mutual funds, and similar accounts typically have no impact on the plan payments of a debtor.
Governing Body
Numerous individuals have heard that a Chapter 13 bankruptcy involves strict oversight by the trustee. Although the trustee's role is to oversee the case, their actions are legal and necessary to the process. Instead of viewing these actions as an attempt to control or micromanage the bankruptcy filing, debtors should view the trustee as a tool to ensure that their case is resolved efficiently.
At the outset of the case, the trustee has complete access to a debtor's bank and financial information. Although trustees monitor payments and associated transactions, monthly bank statements are rarely required or reviewed. The trustee's duty is to ensure that the debtor is making the required payments and to provide assistance as necessary. The trustee can make payments on behalf of the debtor and can even mediate any necessary interactions between the debtor and creditors. The trustee should be regarded as a resource, not as an adversary.
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