In a Chapter 13 bankruptcy an individual debtor makes payments (usually monthly) under a plan and over the plan period pays back part or all of her debt. The amount of the debt paid depends on how much income the individual has available.
The maximum period allowed by law for a Chapter 13 plan is five years or sixty months, in which the debtor usually makes sixty monthly payments and at the completion of the period the individual receives a discharge from the court. One reason Congress has set the five year limit is that anything longer looks dangerously like involuntary servitude. While some plans run for less than five years, most people filing bankruptcy have financial problems that make it necessary for them to utilize the maximum time available, and it is probably fair to say that five years is also the normal period for a Chapter 13 plan.
Based on the law the courts will not confirm a plan that requires more than five years, but the question sometimes comes up of what happens, if because of subsequent events the debtor fails to complete his payments in sixty months. Does the case automatically get dismissed? The answer is no, not necessarily.
In the first place the dismissal would not be automatic. A party in interest such as the trustee would have to bring a motion for the court to dismiss the bankruptcy, and I have seen cases where the trustee has proven willing to work with the debtor, when extenuating circumstances have arisen. Furthermore, the bankruptcy court has the discretion to allow a debtor additional time to complete the plan, and if he felt there was a reasonable cause for the delay a bankruptcy judge would not necessarily grant the motion to dismiss.
No comments:
Post a Comment