ABA Family Legal Guide

Consumer Bankruptcy

Chapter 13: Wager-Earner or Individuals with Regular Income Bankruptcy

Chapter 13 in Action

What does a Chapter 13 trustee do?

After you submit your plan to the court, a Chapter 13 trustee is appointed to handle your case. The trustee will verify the accuracy and reasonableness of your plan. The plan will then be distributed to your creditors, who will have the opportunity at a creditors' meeting to challenge your repayment proposal if they believe it doesn't meet the specific requirements of the Bankruptcy Code. You must attend the creditors' meeting and answer questions under oath from your creditors and the trustee regarding your financial affairs and the proposed terms of the plan. The Chapter 13 trustee attends this meeting, but the judge does not.

The trustee will want to be sure that your plan provides enough money for you to live on, but will also challenge living expenses that seem unreasonably high. One issue will be whether you are making a good-­faith and sincere effort to repay your debts, even if that effort means reducing your living standards, such as by eliminating entertainment expenses. Since the trustee's recommendation will carry considerable weight with the court, it pays to be honest and open with the information that you provide.

After the creditor's meeting, the bankruptcy judge will hold a confirmation hearing, and either confirm your plan or deny it. The confirmation hearing must be held twenty to forty-­five days after the creditors' meeting. If the judge rejects the plan, you can propose another plan. If you are eligible to file Chapter 7, you could also convert your Chapter 13 bankruptcy into a Chapter 7 filing.

Remember that you must start making payments to the trustee, your landlord, and on your secured debts within thirty days of filing, regardless of whether the plan has been confirmed by a judge or not.