I wrote earlier about 12 tips to better understanding the Chapter 13 plan payment calculation process.
Here’s some more insight into just how your Chapter 13 payment might be increased during your plan term. And please remember that Western Pennsylvania has a “conduit trusteeship” which means that all secured loan payments are to be made through the Chapter 13 plan. Note that most other Chapter 13 Trustees throughout the country permit debtors to make mortgage and car loan payments directly and outside the plan.
1) First, when you and your attorney file the original Chapter 13 plan, this is merely the best guess as to the actual Chapter 13 plan payment. For example, there might be uncertainly as to your exact mortgage arrears. There might be a dispute as to your actual monthly mortgage payment. You and your attorney might not know the amount of delinquent real estate taxes or other claims.
Your original Chapter 13 plan is filed right when the case is filed, and the creditors have approximately 5 months to file their claims. This deadline is known as the “Claims Bar Date”. Here in Western PA, the Trustee will schedule a “conciliation conference/plan confirmation hearing” at which time your attorney should appear and meet with the Trustee (and any other creditors) concerning the exact final Chapter 13 plan amount. The Trustee and your attorney will have reviewed the claims filed by the creditors, and there will be a plan payment amount recommended by the Trustee that will be sufficient to pay the creditors in your case. Therefore, this final plan amount might be an increase from the original plan payment.
2) Here’s the biggie: if you miss a payment or two, then you need to eventually catch up. Unfortunately, you can’t extend a Chapter 13 plan past 60 months. So, let’s say that your plan payment is $1,800 a month, and you miss two payments. If you’re in month 15 and you have 45 months to go, then your plan payment should be increased by $80 a month once you get back to work. Remember that you’ve ultimately got to pay the “Chapter 13 plan base” by the end of your plan term. If the plan payment is $1,800 monthly, then the plan base is $1,800 times 60 months or $108,000.
3) If your mortgage payment changes, then your mortgage company is required to file a “Notice of Payment Change” with the Bankruptcy Court. You get a chance to review this Notice to see that it’s legitimate. But if your mortgage interest rate increases or your escrow account changes, then your plan payment may need to be increased to account for the new payment.
4) Post-Petition Utility Claims. This is unusual area that will surprise many bankruptcy attorneys from other parts of the country. But here in Western PA, if you’re an Equitable Gas customer in a Chapter 13 case, then their lawyers oversee the utility payments of Chapter 13 filers very carefully. If you fall behind on your gas bill, then Equitable Gas may file a motion with the Bankruptcy Court for an “administrative claim” and have the monthly gas bill be paid through your Chapter 13 plan. At this time, Equitable Gas is the only utility creditor approved to file these types of administrative claims with the Bankruptcy Court.
You have questions or comments, please post them below!