The Role of Chapter 13 Trustees

Anyone who files a Chapter 13 bankruptcy petition gains some familiarity with a Chapter 13 trustee. In Detroit, there are three Chapter 13 trustees. Each trustee administers cases assigned under a particular judge. During the bankruptcy case, trustees collect money from the debtors and send it to creditors. The Chapter 13 trustees are supposed be a neutral party to the case, but many debtors will find that the trustees’ actions usually seem to benefit creditors.

In many cases, a Chapter 13 trustee reviews the debtor’s income and expenses with the goal of making sure that the creditors receive as much money as possible. Debtors are supposed to contribute all of their disposable income toward their Chapter 13 plan. As a result, the trustee will often file an objection in the case if it seems as if certain expenses are unreasonable for someone in bankruptcy. The trustee also makes sure that the debtor’s payment plan complies with the US Bankruptcy Code. Despite trustee objections, an experienced Detroit bankruptcy attorney can get the debtor’s payment plan approved by the court.

When Bankruptcy is the Only Option

Many people tried to avoid bankruptcy at all costs.  Afterall, some of them have spent years building a high credit score and bankruptcy is the last thing they want to even consider.  I remember watching a show on television when a financial expert, Suzy Orman, told a guest that she should file bankruptcy.  I was surprised because that same financial expert often tells people to avoid bankruptcy.

The bad news is that bankruptcy can’t always be avoided and it’s sometimes the best option.  People who can’t afford their bills and often miss payments or pay late are continuously ruining their credit.  They will never be able to rebuild their credit unless they’re able to consistently make the monthly debt payments.  A bankruptcy can be a good alternative because it gives people a fresh start.  The debt is cleared and the process of rebuilding credit can begin.

Bankruptcy may be the only option for people who are unemployed, especially if there’s a limited chance that their circumstances will change due to a disability or lack of job skills.  Most people sincerely want to repay their debt.  However, sometimes that’s not possible and bankruptcy is the best option.

Is Bankruptcy Necessary when You’re Uncollectible?

When a creditor gets a judgment against a debtor, the creditor can attempt to collect the money owed by doing things like garnishing wages, bank accounts or state tax refunds. However, there are some people who are uncollectible. They are unemployed and have no bank accounts or other assets. With uncollectible debtors, creditors only have the option of making written or verbal demands for money.

If an uncollectible person doesn’t pay the debt, there is nothing the creditor can do. However, some uncollectible people still prefer to file bankruptcy in order to have some peace of mind. Bankruptcy stops all collection action. That means no more ringing phones and harassing letters from aggressive creditors and collection agencies. For that reason alone, bankruptcy is an ideal option for some uncollectible debtors. However, uncollectible debtors don’t need to file bankruptcy right away. Sometimes, it might be a better financial strategy to wait. Getting a free consultation with an experienced bankruptcy attorney will help uncollectible debtors decide whether bankruptcy is right for them.

Redd & Rao, PLC provides free bankruptcy consultations. Feel free to contact us at 248-327-3872 for a free consultation today!