How Chapter 13 Works

• Unlike a Chapter 7 plan, when you file for Chapter 13 protection, you agree to pay your debts off to the greatest extent possible. The U.S. Bankruptcy Code allows you to keep a certain amount of your income each month, as much as is necessary to meet your living expenses. Anything you earn over and above that, including any excess in your paychecks, tax refunds and unexpected income, must go to your Chapter 13 trustee each month. The trustee then apportions it among your creditors.
  
  

Warning

• If you can't make a payment, the U.S. Bankruptcy Code does not allow your trustee to "give you a month off" on his own authority because he's responsible to your creditors and for making sure they get their payments. Nor can he give you permission to pay a lesser amount, at least not without the bankruptcy court's approval. He's obligated to file a motion with the court to dismiss your case. You'll receive a copy of the motion, so you'll have warning that this has occurred.
  
  

Notice of Appeal

• If your trustee files a motion to dismiss, Rule 8002 of the U.S. Bankruptcy Code gives you two weeks in which to act. You should immediately notify the bankruptcy court in the Tennessee district that is overseeing your case that you want to appeal and then file an official notice of appeal.
  
  

Hearings

• At the initial hearing in the bankruptcy court in your Tennessee district, the judge decides whether or not to grant you the right to appeal. If he does, your case leaves his jurisdiction. It moves on to either the United States District Court or a bankruptcy appellate panel; the judge will advise you which it will be. You must submit your reasons for objecting to the dismissal in writing to whichever of these courts is going to hear your matter. The trustee is required to respond in writing, as well, to your arguments. After the higher court has reviewed everyone's written arguments, a date is set for "oral argument," which means that you get to appear in person before the panel or the U.S. District Court judge to convince them not to dismiss your case.
  
  

Tips

• You can potentially avoid the entire appeal process if you have any advance warning that you're not going to be able to make a payment. The worst thing you can possibly do is just skip making it. If you're only unable to make one payment on time, notify your trustee immediately. While he can't give you permission to miss the payment, he can hold off on filing a motion to dismiss right away if you promise to make the payment in two weeks or so, then you do so. If your problem is more long-term and something has occurred that you can't make the payments in the amount you agreed to, you can also avert a motion to dismiss by filing your own motion first, asking the court to modify your plan.