Kentucky, Indiana and most courts have a simple Chapter 13 confirmation procedure which outlines the Duties of the Debtor in Chapter 13. Primarily debtors must make payments on time into the plan and to the mortgage if they have one. If the debtors fail to make the payments the trustee will file a motion to dismiss the case or the mortgage company will file a motion to terminate the stay so that foreclosure can proceed.
3 Duties Every Debtor Has
However, the debtor has at least three other duties in most courts after the plan is confirmed and the court issues an order confirming the plan.
- If debtors look on the back of the order of confirmation from the bankruptcy judge they will see that the debtor is required to not sell property without permission of the court.
- A debtor must annually provide a copy of their tax return. In Western Kentucky this also includes turning over the tax refund to the court unless the plan pays 100% to the unsecured creditors. The penalty for the failure to turn over the tax refund or to provide copies of the tax return and budget is simple: dismissal of the case.
- The debtor must also provide an annual budget to the court. This normally only means that the debtor copies their Schedule I and J unless substantial changes have occurred.
However, the debtor should also review their claims after confirmation. Creditors file claims to be paid. These claims are approved unless the debtor advises the attorney or trustee to object to the claim. Claims that are filed may have been filed in the wrong case or may be for the wrong amount. For that reason you should review the claims about 30-60 days after the confirmation hearing to insure that you don’t overpay in your Chapter 13 or pay a debt that does not even belong to you.
The failure to follow these steps will result in dismissal of the case or in overpayment to the creditors. Often the debtor will forget and make the mistake of selling assets while they are in a Chapter 13. If these assets would have been sold by a Chapter 7 trustee the debtor may have problems if they attempt to convert.