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Chapter 13 Trustee Wants to Raise Our Payment But We Can’t Afford It. – Lindsay

“Dear Steve,

We filed Chapter 13 Bankruptcy April 2, 2009 and haven’t heard much from our lawyer other then him saying that the Trustee has requested more paystubs.

We have given all that has been required of us. The Trustee wanted to up our payment from $450 a month to $870 a month. When we filed we were a household of 2, but we recently had a baby so now we are a household of 3. Upping our payment to that amount will not give us enough money for us to live on as she is still going off our previous budget (household of 2).

We just found out our lawyer has not been forwarding the paperwork the trustee has requested of us on to her and we just got a letter of dismissal in the mail. We called our lawyer and he said that it’s because she wants more money but the letter states it’s because our counsel has not given her the paperwork she has requested.

We are totally confused. It’s it fair that we are allowed to get our budget adjusted because we had a baby and our expenses are much higher then before? Could the Trustee be lying about the reason for dismissal? The lawyer said he would take care of it as soon as he could, but we have tried calling and talking to him and he either has nothing to say or doesn’t answer…..What do we do, what are our rights?? HELP!


Dear Lindsay,

I asked your question to a bankruptcy attorney familiar with such issues. Here is what he said.

“Based on the troubled communication between the Chapter 13 debtors and their attorney, my money would be on their attorney not being forthright with them and not the trustee. In fact, they state that they have a letter (from the trustee I assume) that tells them the reason the trustee is seeking dismissal of their case. And I just can’t imagine a standing Chapter 13 misleading a debtor in this manner. These debtors may want to consider retaining another bankruptcy attorney who will communicate with them in an honest and timely manner.

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It’s unclear to me whether the trustee has sent just a letter regarding possible dismissal, or whether the trustee has filed a Motion to Dismiss, or whether the court has actually issued an Order Dismissing Case. The trustee doesn’t have the authority to dismiss a case, only the judge can do that. The trustee can only request that a case be dismissed for good cause.

If the case has been dismissed, the debtors can either file a Motion to Vacate the dismissal or file a new case (with a new attorney I might suggest). If the case is still active with the trustee having filed a Motion to Dismiss, these debtors need to make sure that an Objection is filed to that Motion to DIsmiss within the appropriate time which should be 14 days with the recent amendments to bankruptcy rules regarding time computation. They don’t have time to waste. Then when the matter is set for hearing, I would encourage the debtors to be present in court with their attorney so that they’ll know exactly what is going on and if their attorney is not representing them properly, they can so advise the court at that time.

And yes, the new baby clearly justifies an increase in the debtors’ reasonable and necessary living expenses which would then call for a reduced plan payment. They need to file an Amended Schedule J (household expenses) and possibly an Amended Schedule I (household income) if household income has decreased say from the wife quitting her job to stay home with the new baby. Then depending on whether their Chapter 13 plan had every been confirmed or not, they need to file either an Amended Plan or a Modified Plan to reflect the new proposed plan payment. ”

Lindsay, I can’t think of anything to add. Sounds like good advice to follow.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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