Bankruptcy Law Firm
Chapter 13 Bankruptcy Info
Chapter 13 bankruptcy provides a viable option for those who are unable to qualify for Chapter 7, or for those who wish to keep their assets while still being able to get a better handle on debt. There are several important provisions to be aware of for Chapter 13 bankruptcy, but the main thing to know is that this form of bankruptcy does not simply liquidate debt like Chapter 7; instead, you will repay at least some of the total debt you owe during a three-to-five year period of time, in exchange for keeping your assets.
Chapter 13 bankruptcy has become a very common form of consumer bankruptcy since changes to the bankruptcy code in 2005 made it impossible for many individuals to file Chapter 7. While Chapter 7 has an income cap, wherein you must pass a "means" test or make less than the median income in your state, Chapter 13 does not institute this limitation. Further, while Chapter 7 requires debtors to turn over all non-exempt assets for sale, Chapter 13 does not require this.
In a Chapter 13
- You will make a list of debts you owe
- You will create a repayment plan, which must be approved by creditors. The amount you will pay to the creditors on a monthly basis will be based on your income; however, creditors will generally receive more repayment than they would under Chapter 7.
- You will need to fulfill the terms of the repayment agreement, which extend for anywhere from three to five years depending on your income and debt load.
- At the end of this period, any remaining debts you had originally owed are forgiven or discharged and the bankruptcy filing is complete.
This means Chapter 13 bankruptcy allows you to keep your home and other possessions. It may also not be as damaging to your credit as Chapter 7.
Advantages to a Chapter 13 Payment Plan in South Carolina:
- You keep all your property, exempt and non-exempt.
- You have a longer period of time to pay the debt.
- The debts that are not canceled in a Chapter 7 discharge can be reduced in a Chapter 13 payment.
- You have protection against creditor's collection efforts and wage garnishment.
- Any co-signers are immune from the creditor’s efforts so long as the Chapter 13 plan provides for full payment.
- You have protection against foreclosure by your lender of your home.
- You can file a Chapter 13 after your Chapter 7 discharge to pay off any remaining liens.
- You can file repeatedly.
- You can separate your creditors by class. Different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.
Disadvantages to a Chapter 13 Payment Plan in South Carolina:
- You pay your debts out of your disposable (post-bankruptcy) income. This ties up your cash over the repayment period.
- Some debts will survive after your bankruptcy is closed and you must continue paying.
- Legal fees are higher since a Chapter 13 filing is more complex.
- Your debt must be under $1,000,000 (e.g., unsecured debts are less than $250,000 and secured debts less than $750,000).
- Your debt can linger for years, burdening future income.
- Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.
CHAP 13. FAQ
When does my Trustee payment begin?
Your Trustee payments will begin roughly 3-4 weeks after you file. It is your responsibility to make sure the payments are being deducted from your pay stub. If they are not, please call the case administrator handling your case immediately.
When does my mortgage payment begin?
Your "Resumption" date of your mortgage payment is listed on your Chapter 13 Plan. Generally it is due the 1st of the next month if filed before the 16th. If filed on the 16th or afterwards, it is due the 1st of the following month.
Where do I send my mortgage payment?
Send your mortgage payment to the same address you have been making payments unless told otherwise. I recommend for at least the first few months to send your payments certified in case there is some dispute.
My mortgage company isn't sending me statements!
This is a common complaint. However, you are still responsible to make your payments on time. Many times the mortgage company will resume sending statements if you send them a letter asking them to resume sending them.
It has been 1 month since I filed and Trustee payments have not begun coming out yet!
You are still responsible to get a payment in even if they have not payments are not being deducted yet. Please call the Trustee's administrator handing your case immediate!
What is the Trustee Hearing?
The Trustee Hearing is where the Trustee handling your case asks certain questions to make sure you qualify for a chapter 13 and to question you about possible assets. The Hearing also allows creditors to come and ask questions - although creditors often do not come. Please note that enclosed is a list of possible questions the Trustee asks.
What if I cannot attend the hearing?
Call me immediately! Your case may be dismissed if you miss your Hearing. If I know in advance, I may be able to obtain another hearing date.
What do I bring?
Please bring your social security card and drivers license.
What will the Trustee ask?
Please look at the handout enclosed.
Why did my Chapter 13 payment increase?
Please remember that the initial Plan submitted is only a proposal and a estimate of what the Plan payment will be. Many things can increase the Plan payment including: higher than expected mortgage arrearages, tax arrearages, & objections from car lien holders.
What if my Chapter 13 payment goes up before the Confirmation hearing?
Please note that your are responsible for all payments even if your Chapter 13 Plan goes up before confirmation. So if your plan goes up $15.00 dollars before Confirmation, you are responsible to make the increased payment for all the months leading up to the confirmation.
Do I continue making my car payments?
It depends on if you car payment is in the Plan. Most likely it is - so don't make it!. If you are unsure, look at your Plan enclosed or ask!
I am still getting calls from creditors...what do I do?
Please set pencil and pen beside the phone after filing. Do not speak to creditors unless they provide you their name, who they work for, & phone number. Then give them the bankruptcy case # and my info. If they call you again, please contact me.
Do I attend the Confirmation hearing? What is it?
Most likely not. I will tell you if you need to attend.
What do I do if I change jobs?
Call the Trustee administrator handling your case with the new job address.
Can I pay my plan off early?
DO NOT TRY TO PAY OFF EARLY UNTIL YOU SPEAK WITH ME FIRST!
How can I track my Trustee payments?
You can track in on the Internet. Simply go to 13network.com
Is it possible to convert to a Chapter 7?
Yes. Sometimes it is not practical to stay in a Chapter 13. Feel free to ask me if you have questions.
What happens if I fall behind on my Trustee payments?
The Trustee usually will send a letter to you stating that your case will be dismissed within twenty (20) days if payment if you do not call to arrange payments.
Can I petition the Trustee to have my payments stopped for a few months?
Yes. This is called a Moratorium of payments. The trustee usually wants you to be in a Chapter 13 for at least a year before filing a motion. The Moratorium of payments usually can last for 1-3 months to assist you while you try to find new employment.
What happens if I my Chapter 13 has been dismissed?
Please call me. I may have options for you such as filing a Motion to Reconsider.
I need a loan? What do I do?
Please call me first.
My child support arrearages are in the Plan. Do I need to continue making payments?
Absolutely!
My car is in the Plan, when do I get the car title?
After you finish the Plan, the finance company has to send it to you.
What happens if I fall behind on my mortgage payments while I am in a Chapter 13?
Most likely I will be able to Object to the creditor's Motion to Lift the Automatic Stay. In most cases we can reach an agreement to have you pay the money you are behind over a 6 month period.
CHAPTER 13 PAYMENT AND HEARING INSTRUCTIONS
You are required to attend the "Meeting of Creditors" hearing in approximately 30 days. You will be provided the date, time, and location of the hearing in writing by the court. You must bring your Drivers License and Social Security Card to the hearing or you will be required to come back another day with them. Please meet me at least 1 hour before your hearing in the hearing room, and call my office a day or two before your hearing to confirm your attendance. If you do not attend the hearing, your case could be dismissed on the spot, or if rescheduled, you will be required to pay additional attorney fees.
All Chapter 13 plan payments must be mailed (if not payroll deducted) to the appropriate Trustee at the addresses that they will provide to you in writing. YOU CANNOT BRING YOUR PAYMENT TO THE HEARING!
A plan filed will require payment in approximately 30 days. (For example, a plan filed on April 16th requires a payment by May 16th, however, the Trustee may alter the date that the payment is due, and you must comply with the Trustee=s Order.)
All secured creditors that are paid outside of the plan must be paid on time, with no payments breaks. Failure to pay these creditors in full and on time allows the creditor to request that the court lift the stay, and exercise their collection and/or repossession efforts against the debtor.
If any creditors contact you after you receive your case number, just give them the bankruptcy case number and they should not contact you again. You should receive your case number and notice of your hearing within 7-10 days directly from the court, or you can call 1-800-669-8767 in a few days and get this information directly from the courts automated system.
FAILURE TO PAY YOUR PLAN PAYMENTS (ON TIME) OR YOUR SECURED CREDITORS OUTSIDE OF THE PLAN (ON TIME) WILL CAUSE YOU ADDITIONAL ATTORNEY FEES AND COULD CAUSE YOUR CASE TO BE DISMISSED! IF YOUR CASE IS DISMISSED YOU MAY HAVE TO RE-FILE (IF AVAILABLE) TO SAVE YOUR PROPERTY, AND YOU WILL INCUR ADDITIONAL ATTORNEY FEES. IF YOUR CASE IS DISMISSED (FOR ANY REASON) AND YOU HAVE FILED ANY PREVIOUS CASES IN THE LAST FEW YEARS, YOU MAY NOT BE ABLE TO RE-FILE YOUR CASE FOR AT LEAST 180 DAYS. DECISIONS TO RE-FILE ARE MADE ON AN INDIVIDUAL BASIS, AND THIS FIRM MAKES NO PROMISES TO YOU THAT WE WILL BE ABLE OR WILLING TO RE-FILE YOUR CASE IF IT GETS DISMISSED.
KEEP PROOF OF ALL YOUR PAYMENTS TO THE TRUSTEE AND TO YOUR SECURED CREDITORS OUTSIDE OF YOUR PLAN!
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