Supreme Court rules on Chapter 13 bankruptcy appeal

A recent Supreme Court decision regarding Chapter 13 bankruptcy may affect debtors in Arizona who want to appeal their bankruptcy plans. The justices ruled that a Massachusetts debtor who owed $387,000 on his home did not have the right to appeal the bankruptcy court's decision to refuse to ratify his plan.

The debtor filed a voluntary Chapter 13 bankruptcy petition that he then amended three times in the next two years. His final proposal was a "hybrid" repayment plan that divided the debt into a claim secured by his real estate and an unsecured claim. The debtor proposed that he continue to make regular mortgage payments toward the secured claim and keep the property but treat the rest of his debt as unsecured, eventually receiving a discharge for the unpaid portion after the five-year plan was completed. It was estimated that he would pay only $5,000 of more than $100,000 in unsecured debt.

A bankruptcy court rejected this plan, and that decision was approved by the appellate court. However, the debtor pursued the case, claiming that the bankruptcy court was required to conduct a separate proceeding each time it reviewed a proposed payment plan, thereby allowing immediate appeals on any decision. The Supreme Court finally ruled that only dismissal of a case altered the status quo, not a decision to deny a particular plan.

Those who seek debt relief through filing a bankruptcy case may benefit from the help of an experienced attorney. A lawyer who works with bankruptcy law on a regular basis may be able to help an individual find the best way to deal with insurmountable debt.

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  • MCBA | Maricopa County Bar Association
  • State Bar of Arizona
  • ABA | American bar Association | Defending Liberty Pursuing Justice
  • Oregon State bar
  • NACBA | National Association of Consumer Bankruptcy Attorneys
  • NACA | National Association of Consumer Advocates
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