Below are some frequently asked questions (FAQs) regarding the Chapter 13 process. Please review these questions prior to calling the Chapter 13
office for answers. Thank you.
What happens now that I have filed Chapter 13?
How does a Chapter 13 Plan work?
If there were attachments and lawsuits previously filed against me, what happens now?
What will happen after the 341 Hearing today?
What requirements does the Judge review when approving a Chapter 13 Plan?
Is there any chance my plan will not be confirmed by the Judge?
Why was I required to sign an "Affidavit of Debtor" today?
When are my payments due?
How does payroll deduction work?
How are my creditors paid in the Chapter 13 Plan?
What fees are charged in a Chapter 13 Plan?
How will I pay these fees to the Chapter 13 Trustee?
What happens if I am unable to make my Chapter 13 payment?
Will I have to pay any additional fees to my attorney while I am in the Chapter 13 Plan?
What if I have extra money and would like to pay it toward my Chapter 13 Plan?
Will any creditors be able to garnish my wages or repossess my property while I am a debtor in the Chapter 13 Plan?
What about co-signed loans? How are they handled in a Chapter 13 Plan?
How do I know how much is owed to the creditors during the time I am in the Chapter 13 Plan?
What happens if, in the future, I decide I do not want to be in Chapter 13?
If I don't agree with how much a creditor is receiving, what should I do?
Will a Chapter 13 bankruptcy filing affect my credit rating?
After the case is over, what happens?
Q. What happens now that I have filed Chapter 13?
A. You will likely have questions about the Chapter 13 process. This handbook is designed to answer many of those questions. If you have questions related to the administration of your Chapter 13 Plan, please feel free to call the trustee's office at 330-455-2222. Remember: The trustee's office cannot give you legal advice. For matters regarding legal rights, concerns, or specific questions about your situation, please contact your attorney.
Q. How does a Chapter 13 Plan work?
A. As a form of bankruptcy, Chapter 13 gives you relief from your debts. Most plans are designed to repay debts over a period of not less than 36 months and no more than 60 months. During the time that you are debtor in a Chapter 13 Plan, the court prohibits your creditors from trying to collect from you. You must make regular payments to the Trustee from the period of time designated by your plan.
Q. If there were attachments and lawsuits previously filed against me, what happens now?
A. Chapter 13 filing automatically stays (stops) all legal collection proceedings, with the exception of child support. By filing a Chapter 13 Plan, you are protected from attachments. The clerk's office will mail a notice to all of your creditors advising them of the automatic stay. You and your attorney may notify the creditors sooner, if necessary.
Q. What will happen after the 341 Hearing today?
A. If the Trustee recommends confirmation, your case will go before the Judge in the next few weeks. Your attorney will let you know if you need to be present in court the day of the confirmation hearing, and will inform you of the outcome of the hearing. If the Trustee objects to confirmation, there are some questions that need to be answered, documents that need to be provided, etc. This will delay the Judge's review of your case and result in a subsequent confirmation hearing.
Q. What requirements does the Judge review when approving a Chapter 13 Plan?
A. The Judge will approve (confirm) a Chapter 13 Plan if:
a) the plan complies with the general requirements of Chapter 13
b) all required charges, fees, and payments have been made
c) the plan has been proposed in good faith
d) all secured creditors have accepted the plan and are paid the full amount of the value of their collateral
e) unsecured creditors will receive through the Chapter 13 Plan at least as much as they would have received if you filed Chapter 7
f) the plan seems feasible for you make the required payments and to comply with the plan
Q. Is there any chance my plan will not be confirmed by the Judge?
A. Sometimes a plan is not confirmed. If that is the case, the Judge will usually give reasons why your proposed plan was not approved (confirmed). If your plan is not approved, there are three options: 1) your plan can be appropriately amended, 2) your case may be converted to a Chapter 7, or 3) your case may be dismissed. If the case is dismissed, your creditors will resume collection activity, demand regular payments, etc.
Q. Why was I required to sign an "Affidavit of Debtor" today?
A. The "Affidavit of Debtor" lists many important rules and conditions of the Chapter 13 Plan. By signing the affidavit, you are agreeing to these rules/conditions. It is important that you abide by these rules; breaking them may result in justification for dismissal of your case.
1) Write your case number on all correspondence, including your monthly payment.
2) Pay regular monthly payments to Chapter 13, in the form of a money order or certified check, and mail them to the LOCK BOX address in Tennessee, or by payroll deduction.
3) Pay, on your own, the bills that are not included in your Chapter 13 Plan. (Example: utilities , mortgage or rent, taxes, etc.). These bills must be paid as they come due.
4) Maintain (and pay for) liability and property insurance on property which you have a loan or for property which is valued at $1,000 or more. If you have a driver's license, you must also maintain liability insurance.
5) Notify your attorney before selling any assets (such as a car or a house) worth $1,000 or more.
6) Inform the Chapter 13 office of any changes in your name, address, phone number or employment.
Q. When are my payments due?
A. Your first payment is due 10 days after the date that you filed your Chapter 13 Petition. Payments are then due at least monthly thereafter, and must be mailed at least 10 days prior to the last business day of the month in order to allow sufficient time for your payment to reach the Trustee's lockbox. REMEMBER THAT THIS IS THE DUE DATE.
Q. How does payroll deduction work?
A. The Trustee may recommend that you pay your Chapter 13 payment by payroll deduction. That is because it is a convenient way for you to pay - your employer simply deducts your payments from your paycheck. This is voluntary. It is important to note that Chapter 13's payroll deduction is not garnishment. Remember to notify the Chapter 13 office if you terminate or change employment.
Q. How are my creditors paid in the Chapter 13 Plan?
A. The money you pay into the Chapter 13 Plan is used to pay the trustee fees, attorney fees, and creditors. Creditors who are secured and being paid monthly fix payments all other creditors will be paid from the remaining funds. Next to be paid are "unsecured" creditors (such as credit cards, medical bills, installment loans, etc.).
Q. What fees are charged in a Chapter 13 Plan?
A. The Clerk of Court charges $274.00 as of March 19, 2008 and subject to change. The Chapter 13 Trustee receives a fee up to ten percent of the amount paid under the plan every month for administering the payments. These fees are charged in addition to attorney fees.
Q. How will I pay these fees to the Chapter 13 Trustee?
A. Each month, when you pay Chapter 13, the fee is deducted when the Chapter 13 office pays your creditors (including your attorney). Here is an example: If you paid $100 to the Chapter 13 office, your creditors will receive $90 and the trustee will receive up to $10 (or 10%) in fees. The Trustee's fee will continue to be deducted until all of your creditors are paid, as stated by your plan. The Chapter 13 office will send you a report detailing payments received from you, money disbursed to all creditors, and fees deducted for the Trustee. You will receive this report twice yearly. Be sure to review these reports carefully when you receive them.
Q. What happens if I am unable to make my Chapter 13 payment?
A. You and your attorney prepared your monthly budget. It takes a lot of determination and discipline to stick to it and make it work. But there may be a time when something changes in your budget, making it difficult or impossible for you to make your payment. Any time there is a change in your financial situation, it is important that you immediately contact your attorney. It may be necessary to schedule an appointment to meet with your attorney to review these changes.
IMPORTANT: The Trustee's office administers your Chapter 13 Plan; it cannot authorize you to pay less than required or to miss a payment.
Q. Will I have to pay any additional fees to my attorney while I am in the Chapter 13 Plan?
A. During the time you are making payments on your Chapter 13 Plan, situations may arise that will require your attorney's advice, making it necessary for you to meet with your attorney. Your attorney may have a right to receive additional fees for these services, but the attorney must first request additional fees to be allowed by the Judge. The Judge will then review the request and decide whether to approve the additional fees and the manner in which the fees are to be paid. You must be notified of this request and you have a right to respond.
Q. What if I have extra money and would like to pay it toward my Chapter 13 Plan?
A. All sources of extra money should be discussed with your attorney. Examples of "extra money" include, but are not limited to, any form of income, such as: tax refunds, disbursements from 401k plans, increases in wages, bonuses, profit sharing, inheritances, proceeds from sales of assets, etc. Your attorney can advise you about the manner in which this money can be paid toward your Chapter 13 Plan.
Q. Will any creditors be able to garnish my wages or repossess my property while I am a debtor in the Chapter 13 Plan?
A. As a general rule: No. Creditors in your Chapter 13 Plan cannot attach your wages or repossess property. If, however, your payments to Chapter 13 are not being made, and if you have secured creditors, the secured creditors may go to court to receive permission to repossess property. But there are exceptions to this general rule. Specific questions about your situation should always be discussed with your attorney.
Q. What about co-signed loans? How are they handled in a Chapter 13 Plan?
A. If your Chapter 13 Plan includes the co-signed loan and specifies that it is to be paid in full, then the creditor should not attempt to collect on this debt. If however, your Chapter 13 Plan allows for partial repayment of a co-signed loan, the creditor may request permission of the Judge to collect from the other person the portion of debt not being paid through the Chapter 13 Plan. If you have a co-signed loan, you will want to discuss the account with your attorney.
Q. How do I know how much is owed to the creditors during the time I am in the Chapter 13 Plan?
A. Every six months after you file, the Chapter 13 office will send you a report detailing what has been paid to your creditors. Please carefully review the report and contact the Chapter 13 office or your attorney if you have any questions or concerns. The report will list all receipts during the period and the total dollars disbursed to your creditors. The total balance due may be an estimate, as your plan may include some interest-bearing accounts. If this is the case, your balance will change each month. The balance on your report is, therefore, only an approximate amount.
Q. What happens if, in the future, I decide I do not want to be in Chapter 13?
A. There are no restrictions on you to remain in Chapter 13 if you do not want to remain. If you wish to stop your plan, you must contact your attorney. Do not simply stop paying; you must communicate your intentions with your attorney. It is important to note that collection activity will resume, unpaid balances will be due, and all interest, finance charges, and late fees not allowed by the bankruptcy court will be assessed to your account balances. You will be subject to the creditors' terms and not the protected terms of the court.
Q. If I don't agree with how much a creditor is receiving, what should I do?
A. The Trustee will pay each creditor a percentage (as your plan describes) of the amount listed on the creditor's proof of claim. If you disagree with the amount a creditor claims you owe, please contact your attorney.
Q. Will a Chapter 13 bankruptcy filing affect my credit rating?
A. Our credit record is a history of your past credit activities and is available to creditors. Each creditor has its set of criteria for approving credit. Upon reviewing your credit record, the creditor will see that you have filed Chapter 13, in addition to your past credit activities. Based on that creditor's set of criteria, the creditor decides whether it can or cannot grant credit to you. Your bankruptcy filing will remain part of your credit record for seven to ten years.
Q. After the case is over, what happens?
A. Listed below is a sequential order in which certain steps will occur when your Chapter 13 is completed:
1) You (or your employer, if you are scheduled to pay by payroll deduction) will be released from making any further payments.
2) Approximately four months of being released, but after all checks have cleared the bank, the Trustee will issue a final report. The report will state all money received from you or your employer and will list all funds disbursed to your creditors.
3) Within four months of the last report, the Judge issues an Order of Discharge. This Order of Discharge is sent to you and all of your listed creditors.
4) Approximately six months after your case has been discharged, it is recommended that you contact the local credit bureau to make sure the bankruptcy is noted as being discharged. If you have any questions related to this matter, please contact your attorney.
Please note: A discharge will not apply to certain debts. Those debts may include:
a) Any debts not listed in the Chapter 13 Plan
b) Any debts incurred after the filing of the Chapter 13 Case (no debts may be incurred without Court approval)
c) Any child support, alimony, or monies owed in connection with a separation agreement or divorce decree
d) Student loans owed to a government agency
Talk to your attorney about which debts are not dischargeable.