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What happens after a Chapter 13 plan established?

When filing for Chapter 13 bankruptcy in Tennessee, the debtor will enter into a payment plan approved by the court. This plan is legally binding for both the debtor and for the debtor's creditors. After the plan is established, it is up to the debtor to see it through to the end.

First of all, the debtor is obligated to make regular payments according to the specifics of his or her plan. These payments are either made out to the trustee or are automatically taken from the filer's wages. Automatic payroll deductions are often a useful means to making sure that the necessary payments are made.

In addition, many people enter into Chapter 13 payment plans so that they can keep certain pieces of property through the bankruptcy. They will be able to do so, as long as they keep up with their Chapter 13 plan, making timely and accurate payments. In addition, the debtor cannot take on new debts while under a Chapter 13 payment plan unless they first consult with the plan trustee. This is because taking on additional debt could make it so that the debtor is financially unable to complete their Chapter 13 payment plan.

A debtor under a Chapter 13 payment plan usually must stick to a fixed budget for as long as the plan lasts. This is not necessarily a bad thing, and could be a good start for a brighter financial future.

If a debtor cannot follow through on their Chapter 13 payment plan, a number of things could happen. First of all, the court could dismiss the debtor's bankruptcy case, setting the debtor back to the same financial situation they were in prior to filing for bankruptcy. Or, the plan can be converted to a Chapter 7 liquidation bankruptcy.

As this shows, following through on a Chapter 13 payment plan can be a good way for debtors to address their financial situation while retaining personal property. By completing a Chapter 13 payment plan, a debtor's creditors can be at least partially satisfied, and the debtor can make a fresh financial start.

Source:, "Individual Debt Adjustment," Accessed May 4, 2015

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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