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Supreme Court rejects bankruptcy appeal


A recent decision by the United States Supreme Court regarding a bankruptcy case could have an affect on Illinois debtors who want to file for protection under Chapter 13. The court ruled that a debtor who proposed a bankruptcy plan that was rejected by the bankruptcy court had no right to an appeal of the court's decision.

The debtor in the case filed a personal bankruptcy case under Chapter 13 of the code and created a repayment plan that he modified several times over the next two years. Ultimately, the debtor proposed that he be allowed to pay his $387,000 mortgage as a secured debt and treat the rest of his $101,000 in liabilities as unsecured debt. In effect, this would have resulted in the debtor paying about $5,000 of his liabilities and keeping his home over the course of the five-year plan.

The bankruptcy court rejected the plan, and the debtor appealed the decision. The Appellate Court upheld the lower court's decision, but the debtor pursued the case to the Supreme Court. The justices ruled that the debtor did not have an automatic right to an appeal based on the idea that every court must review the plan individually, and that each subsequent rejection is an automatic appellate issue.

For those who are seeking protection under a Chapter 13 bankruptcy plan, the issues surrounding debt and repayment can become complicated. A bankruptcy attorney may be able to help the debtor determine what must be repaid and what can be discharged as well as petition the court for approval of the plan.