The majority of Chapter 13 cases are written to extend over a 5 year period. This is the maximum amount of time you are allowed to remain in a Chapter 13 case. During the course of those five years many situations will arise which relate to your Chapter 13 case. Below are a number of common questions and scenarios that come up over the course of a Chapter 13 bankruptcy.
Remember that it is up to you to monitor your case and read all documents sent by the court and our office. We cannot make your case work without your help. Below are links to the Chapter 13 Trustee’s web sites. Please take the time to visit these sites for updated information related to your Chapter 13 case.
I received a letter from the trustee titled “Objection to Confirmation”….
After your 341 hearing you will hear the trustee announce several objections in your case. Most cases will draw small objections from the trustee . DO NOT PANIC . This is a standard letter that goes out. Your attorney is also served a copy of this letter so that he can ensure that all issues are resolved prior to confirmation. Before you leave the hearing the attorney will go over with you what needs to be done to cure these objections. WHEN YOU GET THIS LETTER DO NO PANIC. NO ONE IS DISMISSING YOUR CASE. The trustee is only telling you that if you do not address these issues THEN your case will be dismissed. Consult with your attorney right away if you receive this kind of letter.
I have changed jobs…
The court requires that your monthly payment be taken directly from your paycheck . In the event that you change jobs you will need to notify your attorney so that another Employer Deduction Order can be entered. While the court understands that some jobs have a 90 day probationary period after that time the court will require and Employer Deduction Order. Failure to comply with this order can result in the dismissal of your case.
I received a Motion to Dismiss my case from my Trustee…..
A Motion to Dismiss is filed for usually two reasons:
- You have fallen behind on your trustee payments AND/OR
- The claims filed by your creditors have come in higher than anticipated and because of this your Chapter 13 Plan is running over the allowed 60 months. (The maximum amount of time you are allowed to remain in a Chapter 13 is 60 months)
If you have fallen behind on your payments to the court you will have to bring your payments current by time of the hearing date or else the court will dismiss your case for failure to comply with your Chapter 13 Plan.
If your claims have come in higher than anticipated please call your attorney immediately so that he may review these claims with you to determine if the claims are valid.
I received a Motion for Relief From Stay from my mortgage company/car company….
Chapter 7 Clients: You do NOT need to attend the hearing. This motion will be granted because you are in a Chapter 7 case and if you wish to retain the secured property you will either have to make sure the account is current OR you can work out a repayment plan directly with the creditor.
Chapter 13 Clients: READ the Motion and see what months the mortgage company is claiming that they have not received payments. If you have fallen behind on your mortgage payments you MUST come up with the arrears in order to retain your home. Contact your attorney BEFORE the hearing date so that he can try to work out an arrangement with the mortgage company and avoid a court appearance.
If you do not come up with the money to catch up your mortgage then the automatic stay will be lifted and your mortgage company will be allowed to take action against your property.
If you received the Motion for Relief from the Car Company : You are required by Georgia law to maintain FULL COVERAGE insurance on all vehicles that being financed. If your insurance lapses your car company has the right to demand that they be allowed to repossess the vehicle to ensure that it is not wreck or damaged. If you receive a Motion for Relief regarding your car, contact your attorney right away.
If you do not have full coverage insurance by the hearing date the automatic stay will be lifted and the car company will be allowed to repossess the vehicle.
I received a letter in the mail regarding a late-filed claim…..
All of your creditors have a deadline in which to file a claim and get paid in your case. If a creditor files AFTER the deadline then your attorney (on your behalf) can object to their claim being paid since they missed the deadline. If you receive this kind of letter, call your attorney right away.
PLEASE NOTE: If the late filed claim is for SECURED goods then we can still object to paying the claim in your case but when your case is over the creditor can repossess their property. So if you want to keep your property you will allow the claim to be filed with no objection.
I have had an unexpected situation arise (illness, job loss, divorce) and may be unable to make my Chapter 13 payments for a couple of months….
If you have been in your Chapter 13 case FOR AT LEAST a year and a situation arises in which you know you will be unable to make your trustee payments please contact your attorney right away so you can discuss the appropriate course of action.
I inherited/came into some money…
By law you are required to pay all additional money received into your Chapter 13 case. The funds will be applied to your case (i.e. paying off the debts you owe) and if there are any excess funds available the trustee will cut you a check for that portion. Please contact your attorney immediately if this situation arises.
I have a pending lawsuit…
Any pending legal actions MUST be disclosed on your bankruptcy petition. Failure to do so may result in you being forced to forfeit your recovery to the Chapter 13 Trustee. Please notify your attorney immediately if you retain an attorney for ANY matter.
The bankruptcy court must approve your attorney in order for your attorney to recieve payment for their work on your case. In addition, once a settlement is reached, this settlement must also be approved by the bankruptcy court.
I just received my 6 months case status report…
Your Chapter 13 trustee wll send you a status report every 6 months to show what claims have been filed and how much has been filed. It is very important that you review this report to make sure that the claims are correct. Please remember the following when reviewing your status report:
- Secured claims (other than mortgage arrears) may be split into secured and unsecured claims. The secured claim is the portion that is paid first in your case. The unsecured portion is paid last. Your report will show two claims filed.
- Many times a creditor will sell their right to collect to a third party or use a third party to collect their bankruptcy debt. If you do not recognize a creditor please review the actual claim to see who held the original debt.
- Check to make sure that all secured creditors have filed a claim in your case. Unlike unsecured claims, if there is no claim filed for a secured claim and the case is discharged you will still be responsible for the debt.
My spouse and I are divorcing …
In the event that you are and your spouse decide to divorce while still in bankruptcy you MUST contact your attorney immediately.
My car was totalled in a car accident…
If your car is totalled in an auto accident and you are covered by auto insurance, the insurance company will pay off any outstanding claims for the totalled car in your bankruptcy. If for some reason you receive a check from the insurance company you MUST pay these funds directly to your Chapter 13 Trustee so that the money can be applied to the outstanding debt. Failure to do so can have serious consequences and is a violation of the law.
If you need to obtain another vehicle you will need to complete an application for outside loan once you find a dealer that will give you financing.
What is a consent order?…
A consent order is an order that is entered into after negotiation by your attorney and the party that filed a motion against you. Typically these orders are entered into after a creditor has filed a Motion for Relief from Stay against you for falling befind on your mortage payments or the Chapter 13 Trustee has filed a Motion to Dismiss your case because you have fallen befind on your trustee payments.
These orders are a memorialized agreement with the creditor or trustee that you will make your payments on time and cure any balances that are owed to them. In the event that you default (do not do what you are supposed to do) then a default order will be entered and the stay can be lifted from your case or your case can be dismissed all togather.
Whenever you receive a notice of a motion against you, contact your attorney right away.
The Chapter 13 Trustee took my tax refund …
Once you file for bankruptcy protection from your creditors any excess income over that listed in your initial budget filed with the court MUST be paid to the Chapter 13 Trustee so that he or she may pay your creditors off quicker. The trustee is not keeping your money for themselves but simply paying off your bills.
Although a motion to retain a tax refund can be filed IF you have an emergency need for the funds THAT CAN BE DOCUMENTED.
If you regularly receive large refunds each year please talk to your human resources department about deductions made from your paycheck each month and see what can be done about decreasing tax deductions from your paychecks.
The stay has been lifted on my property …
If after a Motion for Relief from Stay has been filed and you were unable to come up with at least half of what you were due to the mortgage company OR if you defaulted on a consent order and the stay has been lifted you will have the following options:
Work directly with the mortgage company for a repayment plan on the amount owed.
If you do not work something out with the mortgage company or reimpose the automatic stay the creditor can foreclose on your property. You CANNOT WAIT UNTIL THE LAST MINUTE to try to reimpose the stay! This must be done 30 days from the date of the stay lift. This is your responsibility to monitor.
I have changed addresses. What do I do?
Contact your attorney if you need to update your address information.
The Chapter 13 Trustee has filed a motion to convert my case to a Chapter 7. What are my options?
If you are currently in a Chapter 13 case and have fallen behind on your payments the Chapter 13 trustee may move to convert your case to a Chapter 7 case. What this means is that the Chapter 13 trustee thinks that you may have assets (such as your house or car) that have enough equity in them to be sold and the proceeds distributed to your creditors.
You have the following options:
- Catch up your payments to the trustee and continue with your case.
- Voluntarily dismiss your case before it is converted into a Chapter 7. (Please note that you will need to meet with an attorney before this can be done)
- Allow the conversion and begin a Chapter 7 case.
The United States Trustee has requested additional information. What do I do?
The United States Trustee Program is a component of the Department of Justice that seeks to promote the efficiency and protect the integrity of the Federal bankruptcy system. To further the public interest in the just, speedy and economical resolution of cases filed under the Bankruptcy Code , the Program monitors the conduct of bankruptcy parties and private estate trustees, oversees related administrative functions, and acts to ensure compliance with applicable laws and procedures. It also identifies and helps investigate bankruptcy fraud and abuse in coordination with United States Attorneys , the Federal Bureau of Investigation , and other law enforcement agencies.
Typically, some clients will receive a request to provide the documentation related to their case. If you receive such a notice you will need to provide BOTH your attorney and the UST’s office a COPY of all requested documents.
One of my creditors in my Chapter 7 case has filed an objection to discharge. What do I do?
In chapter 7 cases, a discharge is not an absolute right of the debtor. An objection to the debtor’s discharge may be filed by a creditor or by the trustee in the case. Creditors receive a notice shortly after the case is filed with the deadline for objecting to the discharge.
To object to the debtor’s discharge, a creditor must start a lawsuit called an adversary proceeding before the deadline set out in the notice. The code section that addresses this is Section 523.
If an objection to your case is filed you will have the option to either make a payment arrangement on the debt that is in dispute OR respond to their complaint and have the matter heard before the judge.