There is a constant tug of war between the Chapter 13 trustee and creditors on one side, and debtor and debtor counsel on the other side regarding how much money debtor should pay as plan payment. The trustee represents the collective interest of creditors; therefore, the trustee wants to get more money from debtor every month so that creditors can get paid more. For instance, debtor owes $60,000 of credit card. He proposes to pay $300 monthly for 60 months. So, in 60 months, debtor will have paid $18,000. What debtor is proposing is a 30% plan where he will pay only 30% of his unsecured debt. If the court approves the plan, 70% or $42,000 out of the $60,000 of credit card debt will b discharged after debtor has paid $18,000. Naturally, trustee will want to get more than $300 a month from debtor so creditors get paid more. Debtor and debtor counsel, on the other hand, will try to oppose an increase in plan payments.

The first bone of contention will be the amount of deductions being claimed by debtor. If, for instance, debtor claims that he spends $1,000 a month for gasoline, the trustee will object to that expense because it is too high. If the trustee’s objection succeeds to the extent that he is able to reduce the expense claimed for gasoline to $500, in this example, the plan payment will go up by $500, causing the plan payment to become $800, instead of $300. What happens if debtor has a 401K loan that he is repaying? Well, the first thing that the trustee will ask for is a statement showing when the loan will be paid off. Let’s say the loan is $10,000 and repaid at the rate of $500 monthly. In 20 months, it’s paid off. So, the trustee says that on month 21, debtor’s plan payment will go up by $500 because the 401K loan has been repaid in full. Debtor’s plan will be $300 for the first 20 months, and $800 a month starting month 21 until month 60. Debtor objects to trustee’s proposal to bump up his plan payment on month 21. Who is correct?