30 Oct

The last date most creditors can file proofs of claim in a Chapter 13 case is 90 days after the first scheduled meeting of creditors. Governmental units get 180 days from the date the petition was filed. Under the new bankruptcy law, BAPCPA, this deadline to file claims is usually after the confirmation of the Chapter 13 plan. As a result of this delay, sometimes a plan which is feasible when confirmed, becomes infeasible after all the claims are filed. This occurs when creditors file claims for more than the debtor s plan anticipated.

Some Bankruptcy Courts confirm what is called a pot plan . This is a plan that requires the debtor to pay a certain of money to the Chapter 13 trustee over the life of the bankruptcy plan, and pays unsecured creditors a pro-rata share of whatever is left after administrative fees, secured and priority creditors are paid (the balance of the pot ). In these Courts, if creditors file for more than anticipated, it simply lowers the percentage unsecured creditors get paid from the pot.

Other Courts, such as in the Northern District of New York, confirm a plan requiring the debtor to pay not only a set amount of money to the Trustee (the base ), but also to pay a minimum percentage of the claims filed by the unsecured creditors (the claims ). In these Courts, if creditors file claims for more than anticipated, the amount of the base is not enough to pay the claims in the minimum percentage called for in the confirmed plan. This makes the plan infeasible , and will either bring on a motion to dismiss the case by the Trustee, or will require a modification of the original confirmed plan to either pay in more money or to lower the percentage to the unsecured creditors.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.
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