When you’ve been under the gun with your creditors for a long time, it’s easy to build the habit of paying your payments just a little late.  Knoxville bankruptcy lawyer Dan Scott warns that against failing to may your Chapter 13 Plan payments late.  The result is that your case can be dismissed and the protection you sought with the filing of your bankruptcy case is lost.

Bankruptcy Court

So when is your first Chapter 13 Plan Payment due?  Under Section 1326 of the Bankruptcy Code your first plan payment must be made within 30 days after filing the bankruptcy case.  This is a pass or fail date.  If you fail to pay the first payment when due, then your case will be dismissed.

Don’t get confused about whether your Plan has been confirmed or not.  Under most circumstances, your Section 341 Creditors Meeting will not have occurred during the first 30 days.  Make your payment anyway.  If you are paying weekly or bi-weekly make all of the payments timely.  If your Plan is not ultimately confirmed, the monies paid to the Chapter 13 Trustee will be refunded to you.  Failure to make the payments timely will draw a Motion to Dismiss your case filed by the Chapter 13 Trustee.

In a Chapter 13 bankruptcy case a you are able to pay your creditors over time (36 to 60 months).  Debtors pay only a small percentage of unsecured debt under the plan.  When the payments are made to the Chapter 13 those funds are distributed to the creditors based upon the plan once it’s approved by the court.

In most cases in Knoxville a wage order is entered directing the Debtor’s employer to pay plan payments directly to the Chapter 13 Trustee.   This order is not a garnishment that is entered without the consent of the employee.  By filing a Chapter 13 the employee is agreeing to make the Plan payments and the wage order is simply a vehicle to accomplish that result.

Only an experienced bankruptcy attorney can help evaluate and advise you concerning the necessary amount of the payments and the timing of those payments.  Although the payments will continue for 36 to 60 months, the early payments (especially the payments due during the first 30 days) are the most critical to be paid timely.