Arkansas residents who are struggling with overwhelming financial obligations may be interested in a recent Supreme Court decision that may limit their rights in Chapter 13 bankruptcy. The Court has rejected an argument that the refusal of every proposed bankruptcy payment plan allows for an appeal.
In December 2010, a Massachusetts man filed for Chapter 13 bankruptcy. He proposed multiple repayment plans, finally settling on one that separated assets into secured and unsecured claims. Under this plan, he would make regular payments on the secured assets, including his $387,000 home mortgage. However, the unsecured portion of the plan would only effectively require that he pay back $5,000 out of over $100,000. The bankruptcy court rejected his plan in 2012, and the man appealed the decision.
Now, the Supreme Court has ruled against the man’s right to further appeal. The man argued that his various amendments to his proposed payment plan were separate legal proceedings, each immediately appealable. The Court, however, held that only a confirmation or dismissal counts as a final judgment. Effectively, this means that there is no guaranteed appeal for each dismissal of a proposal. Allowing appeals of each rejected plan could drag a bankruptcy case out for years. The Court reasoned that the limitation on allowable appeals gives the debtor incentive to work with creditors to come up with a fair plan for all parties.
Understanding the implications of filing for Chapter 13 when it comes to a person’s real property and other assets can be difficult without the guidance of an attorney who has experience in bankruptcy law. The attorney can work with the client in the preparation of the required repayment plan with an eye towards prompt approval.