What can cause a higher chapter 13 payment than initially proposed?

When filing a chapter 13 petition, a plan payment is calculated based on the figures included in the petition, and a plan is proposed by the debtor. In some cases, this payment will be confirmed by the court and may continue for the life of the plan. In other situations, changing the payment may be necessary to obtain plan confirmation. If the debtor changes his or her mind about what plan to pursue, e.g. the debtor decides to pay for a car instead of giving it up, the payment usually changes, and this is no surprise. However, other things can impact the payment, including:

  • Different Claim Amounts. The initial plan proposal is based on the debtor's scheduled debt amounts. Even a diligent debtor may be uninformed of the precise amount a creditor claims. When the debtor proposes to pay the particular debt, a claim coming in higher can result in a higher plan payment. Mortgage arrearages, car payment balances, and tax claims are the most frequent sources of differing claim amounts. A debtor can dispute a claim amount through the claims objection procedure.
  • Dispute Over Payments to Unsecured Creditors. A party, most frequently the chapter 13 standing trustee, may disagree with how a debtor proposes to pay (or not pay) unsecured creditors, such as creditor card lenders. Reasons for disagreement are plentiful, but include disagreement over expense deductions claimed by a debtor, disagreement over the value of the debtor's assets, or changes in the debtor's financial circumstances. The debtor has a choice of whether to go along with the standing trustee's recommended payment, or to have a contested confirmation hearing and attempt to convince the bankruptcy judge to confirm the plan as originally proposed.
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