Role of the trustee
The trustee acts as the disbursing agent
for the payments made into the plan: he collects the
debtor's payment and pays it to creditors as provided by
the plan for that case.
The trustee also reviews the plan and challenges those
plans that don't, in the trustee's opinion, meet the tests
for confirmable plans set out in the Bankruptcy Code.
If the trustee and the debtor can't agree on the terms of
the plan, a judge will decide if the plan can be confirmed.
Once the plan is confirmed, the trustee pays creditors
regularly from the payments made by the debtor. Generally,
all payments on debt existing at the beginning of the case
must be paid through the trustee; current mortgage payments
and some leases are among the exceptions.
Payments through the plan:
The debtor must make the first payment on the plan within
30 days of the filing of the plan and each month
thereafter. Payments begin before the first meeting of
creditors (the ยง 341 meeting) and continue even while
objections to confirmation are pending. Payments must be
made in certified funds, such as money orders or cashiers
checks or by voluntary wage deduction.
If you stop making plan payments, the trustee will ask that
your case be dismissed.
Can creditors reject the plan?
Creditors' objections are limited in Chapter 13. They don't
get to vote on whether they will accept the plan, as they
do in Chapter 11. They can object only if they contend the
plan does not meet the best interests of creditors test and
the best efforts test, or if they contend the debtor has
not proposed the plan in good faith.
A secured creditor can also object to the value that the
plan places on the creditor's collateral. (The trustee can
raise any objection that a creditor could raise).
Objections to confirmation are usually resolved by
negotiation between the debtor's counsel and the objecting
party, frequently by some sort of compromise. If the
parties can't reach a compromise, the judge will decide the
question.