Chapter 13 FAQs

Chapter 13 Information

Pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), please be advised that:

We are a Debt Relief Agency.
We help people file for Bankruptcy Relief under the Bankruptcy Code.

While the majority of cases in this office are Chapter 7 matters, Chapter 13 provides an alternative. It is designed to assist individuals with regular income, who want to repay all or some of their debts, but need time to do so. Under BAPCPA, it is also required for debtors whose household income exceeds certain levels. Most Chapter 13 Plans extend for 5 years (60 months), and must do so if the debts are not repaid in full. In other words, a “full repayment” Plan can be less than 60 months, but a Plan that provides less than full repayment of all debts must be for a full 60-month term. At the end of the Plan term, the remaining debts (with a few exceptions, I can explain) are discharged in the same manner as a Chapter 7 case. Under the Chapter 13, most debts also cease to incur interest, and in most cases, a significant portion of the legal fee is also paid through the Plan.

Eligibility

Any individual, or married couple, may apply for Chapter 13 relief and protection, unless their debts are above certain limits. This is a rare occurrence, and our office can explain these requirements. There may also be limitations in cases where a person has previously filed for protection in the Bankruptcy Court, which we can examine in detail for you.

the basic workings of a chapter 13

The protection from creditors begins when the case is filed with the United States Bankruptcy Court. The location of the Court is determined by where the person filing lives, or has recently lived. The Court must be provided with detailed information concerning all household income and all financial obligations, even those that are up to date. Our questionnaire which is on this website provides a guide to assembling the required information. This can be a time-consuming and sometimes difficult process, and we encourage you to call us with questions. It is critically important that you provide complete and truthful information on all income, debts and assets.

The filing fee to the Court is $274, and the legal fees will vary, depending on the complexity of the case. They generally run in the neighborhood of $2,500 to $3,500 per case, and payment can be addressed as part of the Plan, which provides for monthly payments to the Chapter 13 Trustee. The Trustee then distributes funds to creditors in accordance with the Chapter 13 Plan, which we prepare as part of our representation in your case. We are very “hands-on”, and want our clients to be very involved in this part of the process.

Once the Chapter 13 Petition is filed, nearly all legal and/or collection actions are “stayed”. This means that creditors must discontinue all collection activity, including lawsuits, garnishments, repossessions and foreclosures. Debtors are allowed a reasonable time to bring payments current through the Chapter 13 Plan. This must be filed within 15 days, with the first payment due no later than 30 days from filing. Regular recurring debts, such as monthly house payments or other secured installment payments such as car payments, must be kept up to date after filing.

The following information is provided by and
presented here with the permission of the Chapter 13 Trustee.

We hope this assists you and encourages you to call us with questions.
We are here to help.

Payments:

You must make payments to the Trustee as described in your Plan. In most cases that will be shown on the budget as a monthly payment. The Trustee will also require an assignment from earnings upon Plan confirmation. Your first Plan payment is due thirty (30) days from the date your Plan was filed at the U.S. Bankruptcy Court in the FULL monthly amount (even if you will later be paying bi-weekly). Failure to make the 1st Plan payment on time will result in an automatic dismissal of your case. This payment is due even if your Plan is not initially approved. If your 1st Plan payment is returned by the bank, your case will be dismissed automatically. Returned checks will not be re-submitted. All payments will be deposited immediately. The Trustee does NOT accept post-dated checks.

The Trustee will accept personal checks, money orders and cashiers checks, which MUST include:

            (1) your NAME
            (2) your ADDRESS            and
            (3) your CHAPTER 13 CASE NUMBER

FAILURE TO PROVIDE YOUR CASE NUMBER WILL RESULT IN DELAY OF POSTING FUNDS/INFORMATION TO YOUR CASE. THE TRUSTEE’S OFFICE DOES NOT TAKE RESPONSIBILITY FOR MISDIRECTED FUNDS/INFORMATION.

THE TRUSTEE DOES NOT ACCEPT CASH OR CREDIT CARDS!

All payments should be made payable to:

Gerald M. O’Donnell, Chapter 13 Trustee

Please mail payments to the payment address at:

Gerald M. O’Donnell
Chapter 13 Trustee

211 N. Union Street, Suite 240

Alexandria, Virginia 22314

Remember: The Trustee will not send you a monthly reminder. It is up to you to make sure your payments are received by the Trustee on time. The Bankruptcy Code requires that a payroll deduction order be entered so that your employer pays the Plan payment directly to the Chapter 13 Trustee.

Objection to Confirmation:

You may receive a notice of hearing on an objection to confirmation of your Plan filed by the Trustee or a creditor. This means that your case may not comply with some portion of the U.S. Bankruptcy Code. Please contact your attorney and provide the appropriate information necessary to cure the objection. If you are able to cure the objection by a modified plan or by providing information before the hearing, the objection may be withdrawn. Remember to always continue to make your plan payments according to your current plan even though confirmation of your case is still pending.

Confirmation Order:

If the Trustee recommends confirmation of your case, you will receive a Confirmation Order. This Order confirms the amount of your payment, length of your case as set out in your Plan, and other additional obligations (if applicable).

If you are not paying your unsecured creditors back in full (i.e., less than 100%), you will also be required to provide signed copies (do not send originals) of your Federal and State income tax returns to your Trustee every year within 10 days of filing. Any combined refunds you receive in excess of $250.00 will be required to be paid into your Plan for the benefit of your creditors. This amount represents disposable income which is over and above the required Plan payments to enable you to pay a larger percentage to your unsecured creditors (i.e., state refund of $500.00 + federal refund of $500.00 = $1,000.00 - $250.00 = S750.00 to be paid to the Trustee). Please mark on your payment that it represents a tax refund. You will not receive your discharge unless you complete this requirement. This is in addition to the regular payment made by wage assignment.

Wage Order:

You and your employer will be issued a Wage Order from the U.S. Bankruptcy Court when your case is confirmed, which requires that your payment be taken directly from your payroll check and sent to the Trustee by your employer. Until the Wage Order takes effect, YOU have the obligation to make sure that payments are made. Review your paystub each month, and if your employer failed to deduct the payment, you need to make it directly to the Trustee until the payroll deduction takes effect. You may want to take a copy of the Wage Order to your employer to ensure that your payroll begins the deduction. You may have your employer send your monthly payment by hard check directly to the payment address or by Electronic Funds Transfer.

Claims:

Your creditors have ninety (90) days from the date of your 1st meeting (341 meeting) to file a proof of claim with the U.S. Bankruptcy Court. Governmental units have 120 days to file a proof of claim. Many times a proof of claim is filed in an amount higher than your Plan provides. The Trustee’s office will notify you of all claimed amounts in a report called "Notice of Intent to Pay Claims." You should receive this report approximately six months after you filed your bankruptcy. If you dispute any of the amounts listed, you will need to contact your attorney immediately to file an objection to the claim. Please be reminded that any objections must be filed within thirty (30) days from the date on the notice. If no objections are filed, the debt will be allowed and paid in your Chapter 13 case. No extensions will be allowed!

Chapter 13 Periodic Reports:

You will receive a periodic report from the Chapter 13 office every six months, which will list the payments received and to whom payments have been made during that period. The balance due in the lower right hand corner is not exact, (especially if you are not paying 100% to your unsecured creditors). Proof of claims may be amended or added during the life of your Plan. This report should not be used for figuring a payoff of your case. It is a progress report only!! Please review this report very carefully and call this office with any questions or concerns. You may also request a progress report if you have a need for one. Simply call or write the Trustee’s office with your case number and a report can be mailed promptly.

Review Meeting:

Approximately 6 to 8 months after you file your case, your Trustee will send you a letter scheduling a half-hour meeting to review your case in detail. This meeting is very beneficial in making sure everything is in order, answering any questions you may have and facilitating the closing of your case. If the date that is selected for this meeting is not convenient, please call the Trustee’s office as soon as possible to reschedule.

Missed Payments:

It is important for you not to miss any payments to the Trustee. When you file your Chapter 13, you get the benefit of prohibiting your creditors from taking any action against you. In exchange for that relief, you must complete your obligations under the Plan. One of those obligations is making your payments to the Trustee on time. If you miss a payment, the Trustee cannot pay your creditors as called for by the Plan and the Trustee may be obligated to file papers with the Bankruptcy Court asking that your case be dismissed. If your case is dismissed, your creditors will be notified, and they may resume collection against you.

If there is a serious change in your circumstances, you should notify your attorney as soon as possible before you miss a payment. Your attorney can re-evaluate your financial situation and if appropriate, modify your Plan to reflect the changed circumstances. This process can take several weeks, so be sure to contact your attorney if you foresee any problems with your payments.

Purchasing a Car:

During the life of your Plan, you may need to purchase a vehicle. This procedure is possible. However, the car dealership may require written authorization from your Trustee. All requests must be submitted in writing from you for the Trustee to review your case. Please include in your request details such as where and how you are getting the money to purchase a car. The Trustee may require an amended budget in order to determine if you have the ability to finance a vehicle. The Trustee will not give information about your case to a third party. Please allow 5-10 business days to process your request.

Sell or Refinance your Home:

If you own a home, and would like to sell or refinance your property, you should contact your attorney at least thirty (30) days prior to taking any action. Your Chapter 13 Plan requires you to obtain a court order and notify the Trustee and all creditors before you can sell your property.

Refinancing your property may require an order from the Court and you should seek the advice of your attorney in this regard prior to contacting the Chapter 13 office. If refinancing your property requires a payoff figure of your Chapter 13 and you are paying less than 100% to your unsecured creditors, then any payoff given at this time will require you to pay 100% back to your creditors.

Please be aware that all proceeds from the sale or refinance of your property must be paid into the Plan for payment to any remaining creditors. We recommend the proceeds be made by certified check to expedite processing. Upon the completion of the sale or refinance of your home, you are required to provide a copy of the HUD-1 to allow adjustment of the debts in your Plan. Remember, the Trustee’s office will not give information about your case to third parties, accept a power of attorney, or fax information to anyone. Any information you need will be sent to you at the address on record.

Disclosure:

It is necessary for you to be advised that the information regarding your Chapter 13 filing and the specifics of its administration are available as matters of public record, and the financial details of your case will be disclosed to parties in interest.

Relief from the Stay:

You must always make your mortgage payment or vehicle payment (if applicable) directly to the mortgage company or vehicle financing company on time. Failure to do so may result in a relief from the bankruptcy stay, which could lead to foreclosure or repossession of your property. If you receive a Motion for Relief from the Stay, you should contact your attorney immediately as this may require you to go to court. The Trustee does not attend those hearings, so please call your attorney for advice. You must keep adequate financial records of each payment to your mortgage company and for your vehicle.

Closing:

When you are finished paying all of the creditors in your case in compliance with the Confirmation Order, the closing procedure will begin. If you are paying less than 100% to your unsecured creditors, all tax returns must be on file before the closing process can begin. After all required information and payments have been received, the Chapter 13 office will issue an order to stop your payroll deduction. Any overpayments will be refunded after your case has its final audit. If you would like to pay your case off early, it must be at 100%. When the requirements of your case have been satisfied, you will receive your discharge papers from the Court in approximately four to six weeks.

Reminders:

• You must follow your Plan as filed. This means keeping current with all Chapter 13 Plan payments, post-petition mortgage payments, post-petition taxes, ongoing expenses such as utilities, any secured debts listed in your Plan that you are to pay directly to the creditor, (i.e., vehicles), and forwarding copies of all required tax returns to the Trustee (if applicable).

• Your case number must appear on ALL payments and correspondence or when you call the Chapter 13 Trustee’s office.

• Any requests for information must be submitted in writing and allowed 5-10 business days for processing. All requests for information will be sent to your address on record and cannot be faxed to anyone, which includes you as the Debtor.

• It is important to send any change of address, phone number, or employment in writing to the Trustee and attorney, and provide the U.S. Bankruptcy Court with a change of address in order to receive your final report and discharge papers upon completion of your case.

• At any time during the life of your Plan, please feel free to call or write the Chapter 13 Trustee’s office with any questions or concerns. They are there to assist you in successfully completing your case. If you need legal advice, we may refer you to your attorney.

We are a Debt Relief Agency.
We help people file for Bankruptcy Relief under the Bankruptcy Code.

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