Unsecured Claims Under The Repayment Plan
The amount of money you will pay to unsecured creditors will depend on your “disposable income.” Disposable income is simply the money you will have after paying necessary expenses for you and your dependents.
So, you must allocate all disposable income to paying your unsecured debts. Unsecured creditors may get some or all the money you owe them depending on how much your disposable income is. But, the creditors must get at least what they would get had you filed a Chapter 7 bankruptcy.
Also, you must make all payments within three years if your current monthly income is less than the state median. If your monthly income is greater than the state median of a family the same size, then the commitment period will be five years.
What Is A Wage Order
Some debtors either voluntarily or by suggestion of the Chapter 13 Standing Trustee choose a Wage Deduction as a more convenient way to fund their Chapter 13 Bankruptcy. A Wage Deduction Order, signed by the Bankruptcy Judge, will be issued to your employer. Your employer will then make your plan payments for you by deducting the total monthly payment from your pay and sending that money to the Trustees lockbox address. This money will never be deducted in one lump sum. Amounts will always be deducted in equal installments determined by the frequency of your pay schedules .
Debtor Responsibility: It is essential that you make direct payments to the Trustees lockbox until you actually see the plan payments being deducted from your paycheck. It is also your responsibility to continue with the plan payments in the event there are missed days from your place of employment due to vacation, illness or termination.
Change of Job: If you change jobs, notify your attorney and the Trustees office immediately. This notification must be made in writing. A new Wage Deduction order must be prepared and sent to the new employer. If there is a delay between the time payments through your old employer cease and payments through your new employer begin, you are responsible for making direct payments to the Trustee.
Bankruptcy Court And The Chapter 13 Confirmation Hearing
If you file for Chapter 13, you or your attorney will have to appear at the repayment plan confirmation hearing. Before the hearing, you’ll send your proposed repayment plan to the Chapter 13 trustee and creditors. Each will have an opportunity to file a written objection.
If you resolve the issue raised, the trustee or creditor will likely withdraw the objection. If not, you’ll have the opportunity to respond in writing and to advocate your position to the judge at the hearing.
Unlike the 341 meeting of creditors, the judge will hold the confirmation hearing in a courtroom. The judge will consider any objections and oral argument at the confirmation hearing. If the repayment plan is approved, you’ll move forward with Chapter 13. If it isn’t, the judge will give you time to remedy the problem in all likelihood. If you’re unable to present a confirmable plan after a few tries, the judge will dismiss your case.
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The Trustee May Ask Additional Questions
The trustee may have discretionary questions. These questions are usually intended to determine whether you might have any nonexempt assets that could be claimed by the trustee, or whether there were payments to creditors or transfers of property made before the bankruptcy filing that might be recovered by the trustee.
he trustee may, for example, ask:
· How did you value your home?· How did you value your car?· Do you have any claims against anyone?· Are you expecting an inheritance?· Have you transferred any assets?
What Happens If Someone Objections To My Chapter 13 Confirmation
It is very common for a creditor or the Chapter 13 trustee to object to confirmation. It happens in just about every case. An objection informs the bankruptcy judge that there is an issue with the Chapter 13 plan. Sometimes it is simple. For example, if youre trying to repay your mortgage arrears in the Chapter 13 plan, you may have gotten the amount wrong. Your plan may propose to pay $10,000 to the mortgage company when you actually owe $11,000. This would likely cause the mortgage company to object.
When someone objects to confirmation, your Chapter 13 attorney will address the issue. We handle these issues in a number of ways. Sometimes, we amend the Chapter 13 plan to correct the issues. Sometimes we amend other schedules or statements. In other cases, we may simply have to provide the trustee with additional information .
Objections are simply part of the process. They are normally nothing to worry about. You should not be concerned about an objection unless your attorney tells you that you should be concerned.
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What Is The Chapter 13 Confirmation Hearing
A Chapter 13 is different from a Chapter 7, because a Chapter 13 involves reorganizing and setting up a payment plan to pay off all of the persons debts. There is a meeting of creditors in a Chapter 13, just like there was for the chapter 7, but in this case the Chapter 13 trustee would not be interested in what assets the person had, because they would be interested in what income the person had to be able to set up a payment plan to pay off their debts.
Obviously, the more income someone has the more money the trustees would want to have paid into the plan every month. The judge would decide how much the payment plan would be at the confirmation hearing, and the attorney would work with the Chapter 13s trustee to come up with a payment plan.
In case of a disagreement where the trustee feels that the person should pay more and the attorney argues that the person should pay less, then in that case the person would have to go in front of a judge and have the judge decide exactly how much the person would have to pay in a Chapter 13. The confirmation is whether the court wants the person to improve their plan to pay off all their creditors and get a fresh start.
Who Presides Over The Chapter 13 Confirmation Hearing?
How Long Does The Chapter 13 Confirmation Hearing Typically Take?
What Happens Immediately After The Chapter 13 Confirmation Hearing?
What Are The Differences Between The 341 Meeting and the Chapter 13 Confirmation Hearing?
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What Do I Have To Do Before Filing Chapter 13 Bankruptcy
You are required to take a court-approved credit counseling class before filing a Chapter 13 bankruptcy. You can find a list of court-approved credit counseling agencies here. These classes can be taken online for a nominal fee. Once you have completed the class, you will receive a certificate of completion. The certificate must be filed along with your Chapter 13 bankruptcy petition.
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Objections At The Confirmation Hearing
Either your creditors or the trustee can object to the confirmation.
Why Would a Creditor Object?
If the creditors representative feels the amount youve agreed to pay isnt enough, he or she may object to your repayment plan. In many cases, mortgage lenders and vehicle lenders object when they feel a plan wont cover how much you owed or, in the case of vehicle lenders, when they disagree with your estimate on how much the car is worth.
Why Would a Trustee Object?
The trustees job is to make sure your case is within the spectrum of existing bankruptcy laws. He or she will review all your income and expenses, then use that information to determine whether you plan to pay enough to adequately repay your creditors. If the trustee feels that you should pay more, or if your plan doesnt seem like it makes sense .
What Happens If My Chapter 13 Confirmation Is Denied
Sometimes, a judge will deny confirmation. That means the judge does not believe that the proposed plan meets the requirements of Chapter 13. In this case, the judge will ordinarily allow you to amend the plan and will provide a time frame for doing that. The judge may say confirmation is denied with an amended plan due in 30 days, for example.
If the judge allows you to amend your plan, this is a simple remedy. In some cases though, the judge will not allow you to amend and may instead dismiss your case. This is rare. It would normally only happen in cases where you are abusing the process or refuse to comply with the requirements of Chapter 13. Most judges will give you a few chances to amend your plan before they will consider dismissing your case.
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What Happens When I Complete My Case
When all of the creditors in your chapter 13 plan have been paid, your case has been completed. Once all of the checks that have been sent out to your creditors have been cashed and clear with the bank, a final report will be created. However, it may take up to 4 months from the date your case is completed for all of the checks to be cashed and clear with the bank. Occasionally, one of your creditors will not cash a check and we will have to cancel it. Once we cancel the check, we send the funds to the United States Bankruptcy Court Registry where the creditor will need to file a motion to claim them. Once the Court Registry deposits those funds, we will then issue the final report. A copy of the final report will be sent to you and a copy will be electronically filed with the Bankruptcy Court. The Bankruptcy Court will process the final report and within 3 to 5 business days, they will issue your discharge paperwork to you and your creditors. The final report explains to you how much you sent to our office for your case and how those funds were disbursed to your creditors, attorney and trustee. The Discharge Order is the document that lets you and your creditors know that the case has been approved as completed by the Bankruptcy Court.
Bankruptcy Court And Trustee Responsibilities
In a Chapter 7 bankruptcy filing, the bankruptcy trustee sells your nonexempt propertyassets that you can’t protect with a bankruptcy exemptionand distributes the proceeds to creditors.
In Chapter 13, the trustee doesn’t sell your nonexempt assets. Instead, you pay the value of nonexempt assets through your repayment plan. The trustee will review your plan, however, to make sure it’s feasible and that it treats all creditors fairly. If the court confirms the plan, the trustee will disperse the monthly payments to creditors.
Find out more about what the Chapter 7 trustee does, as well as the responsibilities of the Chapter 13 trustee.
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Cases Requiring Special Adjudication
Sometimes the disputing parties are simply not able to settle their dispute among themselves. Its too complicated for the judge to rule on it during the few minutes allotted at an Adjourned Confirmation Hearing. So the issue is addressed in a separate proceeding, with both sides making their arguments. This is a Contested Matter, or an Adversary Proceeding if it goes so far as requiring a trial. After the judges decision, he or she will either confirm the plan, or in sometimes instead dismiss the Chapter 13 case or change it into a Chapter 7 one.
What Happens If I Miss My Bankruptcy Hearing
Submitted by Rachel R on Wed, 03/11/2015 – 9:48am
What if you miss a court date in your bankruptcy case?
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For those struggling to pay their bills and dealing with the stress of debt collections and living paycheck to paycheck, bankruptcy can be life-changing. However, you risk obtaining the fresh start you deserve if you don’t follow all the rules associated with a bankruptcy filing including showing up for required hearings in the case. Going to your attorney’s office to discuss your bankruptcy or file papers isn’t stressful, but for many people the idea of going to the courthouse to face a hearing is scary. Here’s a look at what to expect, what excuses are acceptable for missing a court date and what to do if you do miss one.
Bankruptcy court is not stressful
Most people have never been to a federal courthouse, and it looks large and imposing from the outside. Inside, there are strict security procedures to gain admittance. You typically can’t bring in your cell phone or computer – only attorneys and court employees can bring in their devices. And most debtors have a negative picture of what happens in the courthouse. You may imagine yourself on a witness stand being grilled about why you couldn’t pay your bills.
When is it okay to miss a bankruptcy court hearing?
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What Are My Chapter 13 Costs
The trustees costs for administering your case are paid from the funds you pay into your plan. The United States Code sets the maximum charge at 10 per cent of the amount disbursed in the case. The percentage fee will vary during the life of your case, but the percentage is generally less than 10 per cent and will not exceed 10 per cent at any time. If your case is dismissed or converted to another chapter prior to confirmation, the trustee will return to you all funds on hand, less court approved attorneys fees and court approved trustee administrative fees.
Secured Claims Under The Repayment Plan
A Chapter 13 repayment plan gives you two options when it comes to secured claims. These are:
- Surrender the property , or
- Continue making payments in your repayment plan and keep the property
If a claim is secured by collateral, then you must repay at least the value of the collateral if you want to keep your property. This should be specifically provided in the repayment plan.
There are also some instances where you won’t have to pay the entire balance on the secured debt. This is called a cramdown. A car loan can be a good example here as a car’s value depreciates immediately after you buy it.
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How Do I File My Chapter 13 Petition And Schedules
You initiate your Chapter 13 bankruptcy by filing your Chapter 13 petition with the appropriate local court. The Northern District of Illinois Bankruptcy Court serves the Chicagoland area. In addition to your petition, you will file schedules that detail your assets, liabilities, income, and expenses. You will also file a payment plan and a list of your creditors. It is important to list all of your creditors in a Chapter 13 bankruptcy. If you do not include a creditor, then that creditorâs debt will not be discharged. Once your case is filed, the clerkâs office will notify your creditors that the case has been filed. As soon as the case is filed, the automatic stay takes effect. Creditors cannot take any collection actions against you while your case is pending.
The Single Asset Real Estate Debtor
Single asset real estate debtors are subject to special provisions of the Bankruptcy Code. The term “single asset real estate” is defined as “a single property or project, other than residential real property with fewer than four residential units, which generates substantially all of the gross income of a debtor who is not a family farmer and on which no substantial business is being conducted by a debtor other than the business of operating the real property and activities incidental.” 11 U.S.C. § 101. The Bankruptcy Code provides circumstances under which creditors of a single asset real estate debtor may obtain relief from the automatic stay which are not available to creditors in ordinary bankruptcy cases. 11 U.S.C. § 362. On request of a creditor with a claim secured by the single asset real estate and after notice and a hearing, the court will grant relief from the automatic stay to the creditor unless the debtor files a feasible plan of reorganization or begins making interest payments to the creditor within 90 days from the date of the filing of the case, or within 30 days of the court’s determination that the case is a single asset real estate case. The interest payments must be equal to the non-default contract interest rate on the value of the creditor’s interest in the real estate. 11 U.S.C. § 362.
Single asset real estate cases are ineligible for the small business or subchapter V election. 11 U.S.C. § 101, 1182.
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How Long The Chapter 13 Plan Lasts
Higher-income filers pay more to their creditors in Chapter 13. Whether your plan must last three or five years depends on your income. You’ll start by comparing your income to the median income of your state. If your income is less than the state’s median income, you can propose a three-year plan. If your income is more than the median income in your state, your plan must last five years.
For purposes of this rule, you must use your average gross income for the six months before filing for bankruptcy and multiply it by two. You can find your state’s median income on the U.S. Trustee Program website .
What Are The Common Reasons For Dismissed Chapter 13 Cases
There are several reasons why a Chapter 13 case can be dismissed. Some are the same as for Chapter 7 cases. Things like not paying the court filing fee, not properly preparing for and attending the meeting of creditors, and not filing all required bankruptcy forms. Other reasons why a Chapter 13 bankruptcy case may be dismissed are:
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Failing to pay the Chapter 13 payments
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Failing to meet certain deadlines
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Failing to propose a Chapter 13 plan that complies with bankruptcy law
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Failing to submit the required documentation to the Chapter 13 trustee
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Failing to file tax returns every year and submitting a copy to the trustee
As you can see, the reasons for a dismissed Chapter 13 usually involve the debtor failing to do something the debtor is required to do under the bankruptcy rules. However, sometimes, a dismissed Chapter 13 case is due to something beyond the debtorâs control.
For instance, if a debtor loses his or her job or becomes ill, the debtor may not have enough money to pay the Chapter 13 plan payments. If changing the plan payment or converting the case to a Chapter 7 case is not an option, there may be no choice but to let the Chapter 13 case be dismissed.
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