The Anatomy of a Chapter 13 Case
Marie-Ann Greenberg , Ch . 13 Standing Trustee District of New Jersey – Newark Vicinage
While taking part in the educational programs of the 2022 Fellows induction , a new acquaintance referred to me as a unicorn . She and others agreed that there are few Chapter 13 trustees inducted as Fellows in this prestigious organization and the masses have little working knowledge of Chapter 13 as a whole .
Chapter 13 is a living , breathing and often complex Chapter of the Bankruptcy Code . Standing Trustees are required to multi-task at the highest level and do so throughout the entire pendency of the case . Contrary to what some may believe , what brings a debtor to Chapter 13 varies greatly , as do the goals of the debtors . In fact , a debtor ’ s goals may change over the course of the case itself , and that is ok ; Chapter 13 is the people ’ s code .
Getting In :
Debtors entering Chapter 13 must be individuals ; limited liability companies or estates may not file a Chapter 13 petition . They must have regular income according to Section 109 ( e ). That may seem simple enough ; it is not . Regular income can mean different things to different people . It can be salary from a job , family contributions , social security or rent . Depending on the jurisdiction , if a debtor has incoming
“ money ” into the household , that can be used to fund the plan with little regard to the source . Also , the “ source ” might be assets that can be liquidated by the debtor . In many cases , a sale of property , which the debtor would otherwise stand to lose but for bankruptcy , will be sufficient to fund a plan . Thus , the funding mechanism can be extensive .
Inexplicably , debtors are also required to take a credit counseling course prior to filing a Chapter 13 petition . The value of this requirement has been debated over the years . It is an unnecessary additional cost and blocks an individual from unfettered access to justice – to the bankruptcy protection they need , usually immediately . While there are exceptions to the requirement and sometimes the ability to waive it , the mere requirement of having to seek out the exception or waiver is just another roadblock for many debtors . Alas , it is in the Code and thus is subject to enforcement at this time .
In addition to being an individual with regular income and the credit counseling requirement , the non-contingent , liquidated debt level of a Chapter 13 debtor must be less than a combined total secured and unsecured amount of $ 2,750,000 . This is a fairly recent update to Section 109 ( e ) which no longer requires the parties to parse out and distinguish between secured and unsecured debt . Moreover , it increased the maximum to reflect a more realistic financial scenario and to allow individuals to be in a more cost-effective Chapter 13 ,
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