The petition is a well-rounded compilation of documents that details to the court and the trustee all of the available assets that a debtor has. When drafting a plan, it’s essential that all secured claims are represented in the plan, even if they aren’t going to be paid through the bankruptcy. Why? Because the trustee needs to know all assets are being taken care of and have a complete picture of the debtor’s finances.

Common Mistakes with Secured Claims

There are a few mistakes that tend to happen when drafting a plan for secured claims. Here are three common ones and tips for how to avoid them.


  1. Sometimes a secured claim is being paid outside the plan, like a mortgage or car payment. Forgetting to list a secured claim that’s paid outside the plan causes confusion for the trustee because they can’t confirm how the claim is being treated unless it’s specified in the plan. Has the car or mortgage been paid off? If not, how much is the debtor paying per month on the payment? In order for the trustee to approve the plan, he or she needs to know all the debtor’s expenses, including ones that are not included in the plan.


  1. Property being sold can cause confusion when it comes to confirming a plan. If the real estate is being sold either prior to or after confirmation, that needs to be listed somewhere in the plan. The money from the sale will also need to be accounted for. For example, will there be a lump sum payment? Will the debtor’s monthly payment increase? These are all details that the trustee and court will need in order to confirm the plan.


  1. Lease payments, timeshares, etc., are all monthly payments that debtors make, but may not make it into the plan for various reasons. Most plans have an area where you can detail these secured assets and how they’re being treated outside of the plan. Taking time to put this information in will save the trustee and you time in the long run.


The details of a bankruptcy case can be complex. Virtual Paralegal Services has a team of paralegals with years of experience who can assist with bankruptcy issues. Questions? Contact us today to find out how we can help.