How Much is the Chapter 13 Plan Supposed to Pay? In re Schlegel

The chapter 13 Plan in the Central District of California is a preprinted (and mandatory) form which states on the first page:

“The base plan amount is $___ which is estimated to pay ___% of the allowed claims of nonpriority unsecured creditors.  If that percentage is less than 100%, the Debtor will pay the Plan Payment stated in this Plan for the full term of the Plan or until the base plan amount is paid in full, and the chapter 13 trustee may increase the percentage to be paid to creditors accordingly.”  emphasis added.

In Schlegel, the debtor said $815 per month which is estimated to pay 48%.  Emphasis added again.  They paid the $815 for the five years.  The case was dismissed at the request of the trustee because the total payments did not give unsecured creditors 48%.  How can that be, you say?  A creditor filed a proof of claim during the process – late in the plan confirmation process but nevertheless timely – and the debtor basically ignored it.  What should the debtor have done you ask?  He should have amended the plan to provide for the same dollar payment but a new estimate about the percentage the unsecured creditors would receive roughly.

This makes no sense to me.  In some cases the debtor is required to pay 100%.  But otherwise, the bankruptcy code tells us fairly specifically how to compute the amount of the payment but nothing about the percentage.  It is not meaningful in my opinion except to give creditors a rough idea about how much they will get back.  Further amending the PLAN, to tell the the rough amount they will get back has changed seems to me to be form over substance big time.


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