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Brent Blanchard
Brent Blanchard, Bankruptcy Attorney
Category: Bankruptcy Law
Satisfied Customers: 1975
Experience:  Twelve years experience in all aspects of debtor & creditor BK.
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I have a confirmed pro se chapter 13 plan in Utah. I had to

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I have a confirmed pro se chapter 13 plan in Utah. I had to modify my plan to add pre-petition arrears on my mortgage after a trial modification failed to go through. Due to some increased expenses, I have requested to have my plan payments remain the same and then increase in August 2013. The Trustee has objected and stated that if we increase the plan payment immediately, then they remove their objection. They say that my proposal renders the plan unfeasible.

My questions: Is it acceptable under bankruptcy code to make tiered or graduated payments as I have proposed? Could Utah law be different? Upon reviewing my proposed payments, I believe I calculated them $30 short for each month, could that perhaps be what caused the trustee to say my proposal is not feasible?
Thank you for your question.

Utah law is likely to have no effect on a situation where modification to a Plan adds pre-petition arrears to the total debt load.

The details of the forced budget fueling the Plan will determine what is acceptable under the BK Code. Depending on the situation, a Plan could become "unfeasible" if the payments result in the creditors get LESS money under the Plan than they would if the Debtor were to file a "hypothetical" Chapter 7 case, with liquidation of non-exempt assets and the creditors proportionately sharing within each tier of priority whatever funds would become available to them under such a situation.

A Trustee's objection to a Plan modification is likely to be unsuccessful if the modification does not reduce the total funds available to all creditors. Since there is an objection being discussed, I would conclude that you are describing a case where the Plan payments do NOT result in 100% payoff of all the debts. 100% pay Plans usually result in the Trustee not caring about the details, since the creditors get all their money by the end of the 5-year period.

These principles should guide your future discussions with the Trustee.

Thank you.

BAB.
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Customer: replied 3 years ago.

You wrote:


A Trustee's objection to a Plan modification is likely to be unsuccessful if the modification does not reduce the total funds available to all creditors.


 


Would the same apply to a creditor? I believe I have resolved the trustee's objection and need to have funds distribute to my mortgage pro-rata. It shouldn't matter when they get paid, just that they are paid in full during the chapter 13 plan?


 


My plan pays 100% of secured creditors (except the mortgage, just the pre-petition arrears) and 0% unsecured.

Yes indeed, the same standards apply whether a Trustee or a Creditor objects to a Plan.

If mortgage arrears are cleared up in full in the Plan, AND all current payments are made (they can be paid on re-affirmed debts inside OR outside the Plan), I don't see why such a creditor would have any valid reason to object to the Plan.

UNsecured creditors who are set to get nothing might object to a Plan IF there were some way that forcing a change would still get the secured and administrative claims paid in full and THEN get some greater-than-token payments for the unsecureds to share in. I imagine the most likely way for that to happen would be by objecting to the household expenditures/budget. Early in my career, I ran into that with a plastic surgeon whose all-cash, no-insurance pay (=no delays/slow pays) practice just didn't generate money as fast as he was spending it...and he didn't want to sell the furs or the artwork he had bought for maybe twice what it was worth.

Thank you.

BAB.

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