Payment of Claims
You make one lump sum payment to the
chapter 13 trustee who then disperses the payments among
your creditors. If your attorney fees are included in the
plan, those get paid first. The rest of the creditors are
paid in a priority fashion. All the creditors which are
listed on your bankruptcy petition receive notice from the
court that you filed a plan. The creditors then have 90
days to file a proof of claim with the court. On the form,
the creditor lists the amount claimed is owed to them and
whether the debt is secured, priority, or unsecured. For
instance, on your petitionyou listed a balance of $4,230.00
on your Visa card. In order to get paid in your plan, Visa
must file a proof of claim with the amount they claim you
owe them. If they list a claim for $4,360.00, that is the
amount the Trustee will accept as their claim. Sometimes
the balance will be different because additional interest
or a late fee has accrued since your last billing
statement. The proof of claims must be reviewed to make
sure the creditors have filed proper claims. If you do not
agree with a claim, an objection must be filed with the
bankruptcy court. A hearing will be scheduled and you must
offer proof to support your objection. For instance, your
auto finance company files a proof of claim and lists 10%
interest on your vehicle, but your contract states 8%; this
is a mistake that you can contest.
Secured creditors are paid first, then priority debts, then
unsecured debts. If your plan calls for a fixed payment,
then those creditors will be set the same fixed amount
every month until paid in full. If your regular monthly
mortgage or car payments (post-petition payments) are
included in your plan, those are paid first, then the
arrearages on any secured debts. Payments made for taxes,
child support, restitution and the like are made next.
Unsecureds are paid last. The good part of this method is
that if your plan should fail, the secured creditors are
receiving the bulk of your payments.