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Cookeville Office 931-400-2218

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Trustee erred in amending payments according to ruling

On Behalf of | May 9, 2017 | Chapter 13 |

Tennessee residents may have an understanding of a trustee’s role in a Chapter 13 case. A ruling by a judge from the U.S. Bankruptcy Court for the Southern District of Texas further clarified what a trustee is not allowed to do when it comes to adjusting payments retroactively. In this case, a trustee retroactively adjusted 25 different plan payments in the McAllen, Brownsville, and Corpus Christie divisions.

These adjustments were to allow for a home-mortgage claim made after the debtor’s plan had been confirmed. In a Chapter 13 bankruptcy, a debtor uses a payment plan approved by the court to repay creditors over a three or five year period. A portion of the debtor’s income is given to the trustee who then makes payments to creditors per the plan. In the cases involved in the judge’s ruling, the trustee made an error regarding a provision in the standard Chapter 13 plan.

When the amount of an allowed claim is different from the estimated amount listed in a plan, the payments are altered without amending the plan. However, the judge ruled that to alter the payments retroactively was not allowed in the event of a home-mortgage claim filed after plan confirmation. The trustee was then ordered to make payments based on amounts listed in the confirmed plans.

Those who are seeking debt relief may benefit from filing for Chapter 13 bankruptcy. Doing so may allow an individual to renegotiate the terms of a mortgage or other secured loans. An attorney may be able to help an individual before, during and after a plan has been confirmed in an effort to ensure that his or her rights are preserved.

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