Chapter 13 Bankruptcy Plan Must Be Feasible

For a chapter 13 bankruptcy attorney to file a confirmable plan it must be feasible. In other words, a successful chapter 13 plan must have a reasonable possibility of success. To demonstrate a reasonable possibility of success the debtor’s budget must show income in excess of expenses such that the debtor can afford chapter 13 plan payments.

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Inquiry Triggered By Objection

Inquiry into whether the chapter 13 plan is feasible is triggered by an objection to confirmation filed by the Trustee or an unsecured creditor. To determine whether the chapter 13 plan is feasible the court and Trustee will look to the debtor’s budget. As stated above, the debtor’s budget must show sufficient income after expenses to afford chapter 13 plan payments.

When A Plan Is Not Feasible

A chapter 13 bankruptcy plan is not feasible if there is a sizeable risk that the debtor will not be able to afford plan payments. Several instances can give rise to a finding of infeasibility. For instance, a sizeable risk of failure to afford plan payments may be found where the debtor has failed to meet plan payments since filing. A sizeable risk of failure may also be found where the debtor relies upon the income of others (nondebtors) to afford plan payments. For example, if a debtor is married and filing separately but relies upon the income of their nondebtor spouse to meet plan payments, the feasibility of the plan may be questioned since the nondebtor spouse is not obligated under the chapter 13 plan to contribute income accordingly. One clear instance of infeasibility is demonstrated by a plan’s reliance upon balloon payments where the future source of income required to meet the future payments is purely speculative. For example, a plan is not feasible if it proposes to fund future balloon payments from the sale of a house where there is no evidence of an impending sale.

To learn more about chapter 13 bankruptcy visit http://sacramentobankruptcylawyer.us/chapter-13-bankruptcy and find out how you can stop foreclosure or repossession through chapter 13 bankruptcy. If you are unsure whether you have enough disposable income to propose a feasible chapter 13 bankruptcy plan contact our bankruptcy attorney and schedule a free consultation.