CBS Chapter 13 Repayment Plans 3

Question 1

A Chapter 13 debtor misses three consecutive plan payments. What is the most likely consequence?

Accepted Answer

The trustee or a creditor may move to dismiss the case or convert it to Chapter 7

Answer

Failure to make plan payments gives the trustee or creditors grounds to file a motion to dismiss or convert the case under 11 U.S.C. § 1307.

Question 2

Under the Till v. SCS Credit Corp. decision, how is the interest rate determined on secured claims in a Chapter 13 plan?

Accepted Answer

A formula rate starting from the prime rate adjusted for case-specific risk

Answer

Till v. SCS Credit Corp. established the 'formula approach': start with the prime rate and adjust upward to account for risk of default in the bankruptcy context.

Question 3

A debtor's Chapter 13 plan is confirmed. Six months later, the debtor loses their job. Which option is NOT available to the debtor?

Accepted Answer

Retroactively void all creditor claims from the case

Answer

A debtor cannot retroactively void creditor claims; they may seek plan modification, hardship discharge, or conversion to Chapter 7 upon a material change in circumstances.

Question 4

What is required for a debtor to obtain a 'hardship discharge' under 11 U.S.C. § 1328(b)?

Accepted Answer

Failure to complete the plan is due to circumstances for which the debtor should not justly be held accountable, unsecured creditors received at least what they would in Chapter 7, and modification is not practicable

Answer

Section 1328(b) requires: (1) failure due to circumstances beyond the debtor's control, (2) unsecured creditors received at least their Chapter 7 liquidation value, and (3) plan modification is not practicable.

Question 5

How does Chapter 13 treat priority tax claims in the repayment plan?

Accepted Answer

Priority tax claims must be paid in full over the life of the plan

Answer

Under 11 U.S.C. § 1322(a)(2), a Chapter 13 plan must provide for full payment of all claims entitled to priority under § 507, including priority tax claims.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Chapter 13 Repayment Plans 3