Working through a debt reorganization is a complicated process. All aspects of your financial situation, including the details of your income, property, debts, and expenses must be taken into account. Most individuals who choose debt reorganization file for Chapter 13 bankruptcy. The long process of building a repayment plan with Chapter 13 bankruptcy in New Ulm, MN, can be difficult, but Behm Law Group, Ltd. can help you avoid issues that may lead to the dismissal of your case.
To have your debts reorganized into a Chapter 13 repayment plan that fits your financial situation and remains fair to your creditors, you have to pass a number of requirements. One of these stipulations is that you must pass the feasibility requirement in order for your bankruptcy repayment plan to be confirmed or approved by the bankruptcy court. Your trustee will expect you to be able to continue making payments regularly throughout your plan. The trustee will question your ability to pay and will analyze the feasibility of your chapter 13 repayment plan in the event of the following:
- Meeting the First Payments: Because your plan will be put into effect within 30 days of your filing as a sort of “test” before it’s confirmed, you may be required to make 3-6 payments to your trustee before your plan is actually set in stone. It’s likely you can make these payments if you have worked through the plan with a bankruptcy lawyer, but in some cases, plans are dismissed even before confirmation—often because a filer’s financial circumstances have changed.
- Balloon Payments: During your repayment plan period, it’s possible your trustee will request a future “balloon payment.” Balloon payments occur at the end of a chapter 13 plan term. Balloon payments are necessitated where you may have missed a few monthly payments or you may have made only partial payments during some months. At the end of the chapter 13 plan period, a large balloon payment of the remaining balance of your accumulated payments must be met for your plan to remain feasible.
- Income Change: Because Chapter 13 plans span 3-5 year periods, it’s possible for the filer’s income to change during that period. If your income increases, you may be required to increase payment amounts each month. If your income decreases, your plan feasibility will come into question, and your trustee will investigate your ability to keep meeting payments. Your plan payments could also be lowered.
- Asset Sales: In the event you choose to sell an asset and use the proceeds gained to meet payments in your plan, your trustee may investigate the market values and have input in the selling of asset, especially if the market is poor. If you cannot make a payment without making the asset sale, the feasibility your chapter 13 plan may come into question.
There are several other reasons you may not pass the feasibility requirement for your repayment plan when you file for Chapter 13 bankruptcy in New Ulm, MN, but with the support and counsel of Behm Law Group, Ltd., you can avoid many difficulties of the process. For more information, contact us at (507) 387-7200 today.