Where do I mail Plan payments?
Why file Chapter 13 bankruptcy instead of Chapter 7 bankruptcy?
What is Chapter 13?
When will creditors stop calling me?
What is a discharge?
Who is the Chapter 13 Trustee?
The Trustee is also responsible for making sure that you comply with your Plan after the Court approves it. If you fall behind on your payments, the Trustee will likely be the person asking the Court to dismiss your case. The Trustee’s responsibilities do not include reminding you of your payment obligations to the Trustee, making sure you are up to date on your house payments, or negotiating with creditors on your behalf. If a creditor contacts you, if one of your assets is repossessed or foreclosed upon, or if your mortgage company reports that you have fallen behind on payments, contact your attorney, not the Trustee.
The Trustee’s office does not provide information to credit bureaus and will not become involved in any disputes you may have with credit bureaus. The Trustee's office does not provide legal advice. If you have legal questions, you should contact your attorney.
When you filed your Chapter 13 petition, you were required to file a Chapter 13 Plan. Simply put, this Plan states how much you are to pay to the Chapter 13 Trustee and to certain secured creditors, and to whom the Chapter 13 Trustee is to make disbursements. Creditors that have claims based upon certain kinds of debts must be specifically named in your Plan. These debts include mortgages, taxes, child support and/or alimony debts, and debts that are secured by personal property, such as a car, furniture or jewelry. If you are behind on your mortgage payments, your Plan may provide for you to make up the delinquent payments. Your Plan may also provide for you to make your on-going monthly mortgage payments to the Trustee who in turn will make your monthly payment to your mortgage creditor.
Debts on which there is no collateral are sometimes called unsecured debts. These would include but are not limited to debts such as utilities, credit cards and medical bills. Each unsecured creditor is individually listed in the bankruptcy documents filed with the Court. In your Plan, however, these creditors are not individually listed by name but instead are grouped together as unsecured creditors. They are paid a percentage of the amount of their claim. If you are unsure if a debt is secured or unsecured, ask yourself this question: If I don’t pay this debt, is there something the creditor can take away or repossess? If the answer is “yes,” the debt is probably a secured debt, and the creditor and the amount of the debt will have to be specifically provided for in your Chapter 13 Plan.
In most circumstances, all unsecured creditors must be treated equally. There is no provision in the Bankruptcy Code allowing you to favor one creditor of the same type over another, nor is there any provision in the Bankruptcy Code allowing you to omit a creditor from your bankruptcy schedules, no matter how much or how little you owe that creditor. In order to ensure complete compliance with the Bankruptcy Code, you must tell your attorney about all of your debts. The decision as to which debts are to be paid through your Chapter 13 Plan is not yours to make; in most cases, it is determined by the laws governing Chapter 13 bankruptcy.
If you owe money to a family member, you must treat this debt exactly as you treat your other debts. It is unfair for you to pay a family member back in full while other creditors only get a portion of the money you owe them. If you owe someone in your family money, you must inform your attorney. If it is later discovered that you owe money to a family member or if you repaid money to a family member within a certain period of time prior to the filing of your bankruptcy, and failed to disclose this information in the documents filed with the Court, you risk having your bankruptcy case dismissed or converted to a Chapter 7 bankruptcy.
What are my payment obligations to the Trustee?
If you are self-employed, or if your income is from a source such as a pension or Social Security, you are required to send the money yourself to the Trustee on at least a monthly basis. You may be eligible to participate in the Trustee's automatic payment program which allows you to elect to have your Plan payment deducted each month from your checking or savings account.
How are my payments determined?
You should receive from your lawyer a copy of the wage order, which is the Court order requiring your employer to make payments to the Trustee. This order includes your case number, the amount and frequency of your required payments, and the name and payment address of the Chapter 13 Trustee. If you are self employed or your income is derived from pension or social security, you are personally responsible for regularly making the Plan payments directly to the Trustee.
The Trustee does not accept payments by cash or pay-by-phone; nor does the Trustee have a place where you can make payments in person. Payments must be mailed to the Trustee’s P.O. Box shown on the inside cover of this booklet. The Trustee accepts money orders, bank checks, certified checks, and personal checks. However, if you bounce a check, the Trustee will no longer accept your personal checks.
For debtors who are self-employed or on a fixed income, the Trustee offers a payment program whereby Plan payments are automatically deducted each month from your checking or savings account. You may contact your attorney or the Trustee's office for information regarding the program.
The Bankruptcy Code requires that Plan payments to the Trustee start no later than 30 days after the filing of your case. If your employer is supposed to withhold money from your paycheck and send it to the Trustee but does not do so, it is your responsibility to make the Plan payment to the Trustee and to contact your employer and/or attorney about your employer’s handling of your wages. You cannot sit back and wait for your employer to start making payments. It is your responsibility to make certain that Plan payments are made and that you are current in your monthly payment obligations to the Trustee. The Trustee does not send monthly statements, coupon books, or reminders. Failure to make payments to the Trustee is grounds for the dismissal of your Chapter 13 case. If your case is dismissed, then you will not receive a discharge, your debts will not be forgiven, and your creditors will be permitted to resume collecting the money you owe them.
You should tell your attorney and the Trustee’s office immediately if you change jobs. Your attorney should file the appropriate paperwork with the Court so your new employer will begin withholding your Plan payments from your paychecks. Immediately letting your attorney know about your new job will help ensure that no interruption in payments occurs. By making sure payments are not interrupted, you may prevent your case from being dismissed due to a deficiency in funding your Plan.
Included in your payment to the Trustee is a fee for administering your case. This fee is a percentage of the money the Trustee pays to your creditors. By law, this fee can be no more than 10%.
For example: If you pay $100 to the Trustee, the Cleveland Trustee may be keeping $6 as an administration fee, leaving $94 available for your creditors. This is not a separate payment you have to make; it is already included in the money you pay to the Trustee.
Approximately six weeks after your Chapter 13 Plan and schedules are filed with the court, you are required to attend the Meeting of Creditors. If the case is a joint filing by a wife and a husband, both must attend. Your attorney is required to appear with you. The Meeting of Creditors gives your creditors and the Trustee an opportunity to talk to you about your finances and Plan for repaying creditors. The Trustee will also ask about assets you own, debts you owe, income you earn, and expenses you incur. If you own a business, Trustee will inquire about the operation of your business.
You will receive from the Bankruptcy Court a notice in the mail detailing the time and location of your Meeting of Creditors. This examination is recorded and conducted under oath and penalty of perjury. You are required to answer each question accurately, truthfully and to the best of your ability. Your failure to appear at this meeting may result in the dismissal of your case. If circumstances will prevent you from attending this meeting, contact your attorney immediately. Work or family commitments are not satisfactory excuses for missing your scheduled hearing time.
You are required to bring the following items of identification to the Meeting of Creditors:
If you do not bring these items of identification, the Trustee will not conduct the Meeting of Creditors.
Prior to the Meeting of Creditors your attorney should have already filed with the court or provided the Trustee’s office with the following documents:
In addition, the Trustee may require additional documents be provided such as savings, checking or brokerage account statements, verification of income and expenses, vehicle title or lease agreement, evidence of vehicle insurance, or business information. Failure to timely provide these items may prevent the Trustee from conducting a proper analysis of your current financial situation and proposed bankruptcy Plan; and may result in the Trustee asking the Bankruptcy Court to dismiss your Chapter 13 case.
If the court allows you to exclude certain mortgage payments from the bankruptcy plan, you are responsible for making the regular on-going monthly mortgage payments directly to the mortgage company during your bankruptcy case. Your mortgage payment due date will almost certainly be the same as it was before you filed bankruptcy. If the mortgage lender has stopped accepting your payments, you or your attorney may have to call your mortgage lender to arrange for the lender to start accepting payments. You cannot sit back and wait for your lender to contact you about starting your payments. Keep track of all of your cancelled checks, money order receipts, etc. so that, if necessary, you can prove that you have properly tendered your mortgage payments.
IIf you have a car loan, your Plan will provide for the Trustee to make payments to the secured creditor. Your Plan may also provide for the Trustee to make pre-confirmation adequate protection payments which may be required to be paid to the creditor. These adequate protection payments are monthly payments to the creditor occurring after the the filing of your case but before the court approves, or confirms, your bankruptcy Plan.
If you lease a vehicle and your Plan provides for your retaining the lease, you will be responsible for making regular monthly lease payments directly to the creditor. Before the Trustee will recommend your Plan for approval by the court, you must provide the Trustee with evidence (including the amount and date of payment) of your having made the monthly lease payments due the creditor during the period of time between the filing of your bankruptcy case and the court’s approval of your plan.
May I borrow money while in Chapter 13? This $500 limit is cumulative.
For example, if you have already borrowed $200, then you may borrow only $300 more without the permission of the Bankruptcy Court.
Remember, it is the permission of the Bankruptcy Court, not the Chapter 13 Trustee that is required.
In most cases, this will require the filing of a motion with the court, a hearing with a judge, and the signature of a judge upon a court order before you may borrow money. If you must borrow money, contact your attorney before signing any loan papers. Be warned! Some lenders attempt to take advantage of bankruptcy debtors by charging very high interest rates and/or closing costs or other fees.
Actions that require the permission or approval of the Court include:
This $500 limit is cumulative. For example, if you have already borrowed $200, then you may borrow only $300 more without the permission of the Bankruptcy Court. Remember, it is the permission of the Bankruptcy Court, not the Chapter 13 Trustee that is required. In most cases, this will require the filing of a motion with the court, a hearing with a judge, and the signature of a judge upon a court order before you may borrow money. If you must borrow money, contact your attorney before signing any loan papers. Be warned! Some lenders attempt to take advantage of bankruptcy debtors by charging very high interest rates and/or closing costs or other fees.
Actions that require the permission or approval of the Court include:
Student loans are generally unsecured debts, and they are not treated any differently from other unsecured creditors during the term of your Plan. However, Congress has passed laws that affect the balance of the student loan debt that is not paid during your Plan. Unlike other unsecured debt that is unpaid in a Plan with less than 100% repayment, the remainder of the student loan debt is usually not forgiven when the discharge is granted upon completion of your Plan. This means that you will be responsible for any part of your student loan that is not paid through the Chapter 13 Plan. For example, if your Plan calls for a payment of 75% of the amount owed to your unsecured creditors, your student loan will also be paid 75% through the Chapter 13 Plan. When your Chapter 13 Plan is over, you will still be responsible for the 25% of your student loan that was not paid through your Chapter 13 Plan, plus accrued interest.
Domestic support obligations such as alimony, maintenance and child support are generally priority unsecured debts. The laws regarding these obligations require that the arrearages you owe be included in your bankruptcy Plan, and that you continue to make your ongoing monthly support payments. Before the Trustee will recommend approval of your Plan, you must be current on all domestic support obligations that have come due after you filed your bankruptcy case.
As a precondition to receiving a bankruptcy discharge you must certify to the court at the time you complete your Plan that you have paid in full all domestic support obligations that were due since the time you filed your case.
In general, your retirement contributions such as IRA or 401(k) contributions will likely be allowed to continue. Similarly, repayments on retirement plan loans will also likely be allowed to continue. There are exceptions to this rule; your attorney can advise you if your circumstances are such that you will not be allowed to continue retirement contributions or loan repayments. Not repaying a retirement plan loan may have tax implications for you. Before you decide to file a Chapter 13 case you should talk to your attorney about the tax implications of not repaying a loan from your retirement account.
Before the Trustee will recommend approval of your Plan you must have filed all applicable federal, state and local tax returns for all taxable periods in the four years prior to your filing your bankruptcy case.
If you have not filed a tax return for several years, or if you have a tax return for a particular year that has not been filed, you should inform your lawyer. You will have to file with the taxing authorities all delinquent tax returns before the Court will approve your Chapter 13 Plan. The IRS is authorized to estimate how much you owe if you have not filed a tax return for a particular year. In almost all cases, the IRS estimate is considerably higher than the amount you would owe if you had filed the return, so you may save money over the long run by filing your delinquent tax returns. In addition, you may stop certain penalties from accruing when you file delinquent tax returns.
Even if all your returns have been filed, you should be prepared to turn over your federal tax return for the most recent tax year to your lawyer so that the return can be delivered to the Trustee. During the term of your Chapter 13 case, you are responsible for continuing to file your federal, state and local tax returns and to pay taxes in a timely manner. If you fail to file returns and/or pay your taxes, the IRS and other governmental agencies may file claims in your Chapter 13 case, which would disrupt the payments to your other creditors, make your Plan run longer than you planned, and may prompt the Trustee or one of your creditors to file a motion to dismiss your case or convert your case to a Chapter 7.
How do I fulfill the requirement to attend a personal financial management course?
Approximately 120 days after the Meeting of Creditors, the Trustee will send you a Notice of Intention to Pay Claims. This notice lists each creditor that is either listed on your bankruptcy schedules or has filed a proof of claim; and also shows the amount of the claim and whether the claim is either priority, secured or unsecured. You should review this notice carefully and contact your attorney if you have any questions or concerns.
In addition, the Trustee will send you an annual statement of your Chapter 13 case called the Trustee’s Report of Receipts and Disbursements. You should review this statement carefully. The statement details the creditors who have filed claims in your case (and the amount and status of each claim), the amount of money you have paid to the Trustee, the amount of money the Trustee has paid to each creditor, and the balance remaining to be paid on each claim. Except with regard to certain secured claims, and unless you file an objection to a claim, the Trustee pays claims in the amount filed by the creditor, even if that amount differs from the amount you believe you owe that creditor or the amount that you specified in your Chapter 13 Plan for that creditor to be paid. If you notice a claim that you believe does not belong in your case or a claim with an amount significantly in excess of what you believe you owe that creditor, contact your attorney immediately. If a claim is filed in an amount in excess of the amount you believe you owe that creditor, completing your Plan in a five-year period may prove to be impossible. Consequently, your case could be dismissed without your receiving a discharge because you are unable to complete the Plan in a timely manner.
The annual statement also shows your current mailing address in the Trustee's records. If you have moved, it is your responsibility to notify the Trustee's office and your attorney of any change in address. Failure to do so may result in a delay in your receiving important notices, documents and other information concerning your case.
Another option you may have is to access your case information using the National Data Center (NDC) website at https://www.13datacenter.com/. The NDC website allows you to access specific case information as it pertains to your case.
May I pay more than required?
The Trustee will not automatically accept funds intended to pay off your case early. There are a wide variety of variables that the Trustee must consider. You should consult with your attorney if you are considering paying off your Chapter 13 case.
What happens when my case is over?
Once your case is completed, you are responsible for making the on-going mortgage payments that were being paid by the Trustee. The Trustee will notify you in advance of the completion of your case so that you may make arrangements for your resumption of your monthly mortgage payments.
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