Chapter 13 Bankruptcy Can Minimize Credit Damage
Any bankruptcy filing will result in a hit to the filers credit score, and a blot on their retail credit report. A Chapter 7 bankruptcy filing is the most damaging, with the bankruptcy case reported for 10 years after filing.
A Chapter 13 bankruptcy has less impact, with the bankruptcy case reported for 7 years after filing.
What Does A Trustee Do
In both Chapter 7 and Chapter 13 bankruptcies, its the trustees duty to review your bankruptcy forms and investigate and verify your financial information.
One of the trustees responsibilities in doing this is to make sure your bankruptcy claim is not fraudulent.
In addition to ensuring you have a legitimate claim, your trustee in a Chapter 7 bankruptcy is responsible for managing your assets. That includes
- Collecting your property
- Converting your assets to cash
- Distributing the proceeds to your creditors
The trustee will also facilitate the meeting of creditors.
The Chapter 13 Process
First, you should find a bankruptcy lawyer who can provide you with a free evaluation and estimate to file.
The cost to file Chapter 13 bankruptcy consists of filing fees and fees charged by a bankruptcy attorney. Petitioners need to pay a $313 filing fee to the bankruptcy court. They also need to provide:
- A list of creditors and the amount of their claims
- Disclosure of the amount and sources of the debtors income
- A list of the debtors property, as well as an accounting of all contracts and leases in the debtors name
- A breakdown of the debtors monthly living expenses
- Tax information, including a copy of the debtors most recent federal tax return and a statement of any unpaid taxes.
Chapter 13 petitioners must stipulate that they havent had a bankruptcy petition dismissed in the 180 days before filing due to their unwillingness to appear in court. Also, anyone seeking bankruptcy protection, must undergo from an approved agency within 180 days of filing a petition.
Shortly after filing bankruptcy, the debtor also must propose a repayment plan. A bankruptcy judge or administrator will hold a hearing to determine whether the plan meets the requirements of the bankruptcy code and is fair. Creditors may raise objections to the plan, but the court has the final say.
Debtors can arrange to make up delinquent payments over time, but under Chapter 13 rules, all new mortgage payments from the time of filing must be made on time.
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Chapter 13 Bankruptcy Repayment Plan
Chapter 13 debtors create their own repayment plan, which must be written and submitted to the bankruptcy court at the outset of your case. The federal bankruptcy court provides a form for drafting a plan, or you can obtain one from a lower court in your area. The bankruptcy court must approve your plan for you to enter Chapter 13. The plan details your income, property, expenses and debts and includes a proposed payment plan.
A trustee will be assigned to review your plan, assess its compliance with bankruptcy laws, collect your payments and distribute them to creditors, and make sure all terms in your bankruptcy repayment plan are followed.
Your repayment plan will be divided into categories, which include:
Section 13 Vs Chapter 7 Personal Bankruptcy
a prerequisite to part 13 bankruptcy is the fact that the consumer must-have a frequent income to enter in to the debt settlement program. Therefore, when you yourself have valuable possessions and a steady source of income, this form of personal bankruptcy could be helpful.
If you find yourself undoubtedly unable to manage eliminating obligations, then part 7 is what you should think of submitting.
The main distinction between the 2 kinds of bankruptcy proceeding is mostly about the possessions. In section 13 case of bankruptcy could keep your own property during Chapter 7 you will definitely liquidate all of them. Often , in Chapter 7 the case of bankruptcy trustee will sell the possessions to use the income towards personal debt healing.
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What If I Have A Complaint About My Bankruptcy Trustee
If your complaint is about a trusteeâs unprofessional conduct, you can let the local United States Trusteeâs Office know. Theyâre in charge of reviewing and addressing complaints like this. Keep in mind, though, that complaining because the trustee is selling nonexempt property wonât get you far. It may not be what you want them to do, but itâs their job to do exactly that.
Letâs Summarizeâ¦
The bankruptcy trustee doesnât represent the filer and they donât represent any specific creditor. Instead, they act as an independent third party that moves the case through the bankruptcy process and makes sure that unsecured creditors get as much as theyâre due. In most Chapter 7 bankruptcy cases, that means $0.
Chapter 13 Procedures And Administration
An automatic bankruptcy stay commences upon the filing of the Chapter 13 bankruptcy petition. The stay acts as a shield between the debtor and his creditors during the Chapter 13 bankruptcy. The automatic stay prohibits the commencement or continuation of a creditors judicial proceeding and other debt collection against the debtor. The automatic stay will apply to mortgage foreclosure proceedings only as long as the debtor continues making monthly mortgage payments through his Chapter 13 plan. If the debtor intends to surrender a mortgaged property, the lender will usually ask the bankruptcy court to lift the stay so it can proceed with foreclosure.
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The Chapter 13 Discharge
The bankruptcy law regarding the scope of the chapter 13 discharge is complex and has recently undergone major changes. Therefore, debtors should consult competent legal counsel prior to filing regarding the scope of the chapter 13 discharge.
A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan so long as the debtor: certifies that all domestic support obligations that came due prior to making such certification have been paid has not received a discharge in a prior case filed within a certain time frame and has completed an approved course in financial management . 11 U.S.C. § 1328. The court will not enter the discharge, however, until it determines, after notice and a hearing, that there is no reason to believe there is any pending proceeding that might give rise to a limitation on the debtor’s homestead exemption. 11 U.S.C. § 1328.
The discharge releases the debtor from all debts provided for by the plan or disallowed , with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.
Tl dr Chapter 13 Bankruptcy Summed Up
Chapter 13 bankruptcy generally lets you pay what you can on your credit card debt a fixed payment for a fixed time and then the rest of it goes away even if you didnt pay it all. It can be better than paying your minimums since interest stops accruing.
It can be better than debt consolidation since the credit cards cant sue you. Its a way to stop foreclosure and save a house. And every step of the way, Ill be your attorney to ensure that you get to the fresh start you deserve.
Ive helped hundreds of our neighbors navigate these waters, confirm their Chapter 13 plan, and get a discharge for a new beginning.
Id be honored if you contacted me for a consultation.
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How Do I Contact A Chapter 13 Trustee
It is not advisable to contact the Trustee directly. Communications with the trustee should be done through your attorneys office. While it is possible to contact a bankruptcy trustee directly, you really shouldnt do so on your own. In fact, most trustees wont discuss your filing if you are represented by an attorney. If you are contacting your trustee to discuss assets or expenses, the trustee may have follow-up questions. Your attorney will be better equipped to conduct these conversations with years of experience in bankruptcy law.
Why Chapter 13 Is Better Fix Than Debt Consolidation
Chapter 13 bankruptcy is a repayment plan, like debt consolidation, but it fixes all the problems.
You dont want to repay debt, but sometimes you have to. Chapter 13 bankruptcy is when you pay credit debt back, freezing interest, and with peace of mind knowing the credit cards cant sue you. You usually dont pay all of your debt, only what you can. Many bankruptcy attorneys dont do Chapter 13 bankruptcy because theres a lot to it. But this bankruptcy lawyer does.
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You File For Chapter 13
Once you have discussed your financial details with your bankruptcy lawyer, they will explain how to file for Chapter 13 and handle the filing process for you. You will be asked to pay a filing fee .
Once you file for Chapter 13, an automatic stay is issued. This protects your assets and prevents creditors from seeking payment from you once you file, those creditors are forced to go through the bankruptcy process and cannot harass you. Unless the court says otherwise, your home, car, and other belongings are safe.
Can A Creditor Begin Collections If I Miss A Scheduled Payment
If you miss a scheduled payment, Chapter 13 bankruptcy rules allow the trustee to file an “action for dismissal” with the bankruptcy court. This happens because you are breaking your court-approved Chapter 13 repayment plan. Your bankruptcy trustee can ask the courts to dismiss the case if you stop paying your creditors.
You may be able to prevent the dismissal of a case by:
If the bankruptcy court dismisses the case, a creditor may restart collection activities against you. Bankruptcy laws that would stop collection attempts from agencies will no longer protect you at this point. Creditors can restart their attempts to collect the current amount owed on the debt and collect any interest on the debt that happened while you were in bankruptcy.
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Typical Chapter 13 Bankruptcy Case
What does a successful Chapter 13 bankruptcy applicant look like?
Consider Steven and Cathy, a married couple with a home that carriers a $150,000 mortgage. Steven works, Cathy doesnt, but they file jointly for Chapter 13 protection. The couple also owes $7,000 on a car loan and has nearly $20,000 in credit card debt.
Two weeks after filing a petition, they submit a Chapter 13 repayment plan that shows how Stevens income can be used to make mortgage and car payments, and can repay part of the unsecured credit card debt. Their plan includes three categories of debt: priority, secured and unsecured.
Priority claims, which must be fully paid, include the cost of the bankruptcy proceeding, some taxes and child support. Secured debts are those with collateral, like a house or a car, also must be paid in full according to the bankruptcy plan. Repayment of unsecured debts, like money you owe on credit and charge cards, is flexible. The judge will review your income and the length of the repayment plan, then decide how much youll owe your unsecured creditors. The amount could range from nothing to complete repayment.
For Steven and Cathy, this means paying all the court costs and whatever back taxes they might owe. It also means they will become current on their mortgage and car payments. But the judge will decide how much theyll need to pay the credit card companies.
What Are My Obligations Under Chapter 13
Filing for Chapter 13 lets you keep your property and repay creditors over time in a three or five-year repayment plan:
- If your current monthly income exceeds your state’s median income, you must repay creditors in a five-year plan. Your income is your average income for the past six months before filing for bankruptcy.
- If your current monthly income is equal to or less than your state’s median income, you can repay creditors in a three-year plan. This may be up to the bankruptcy court in your area.
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Chapter 13 Trustee Fees And How They Are Compensated
In some bankruptcy proceedings, debtors sell off their assets, use the funds to pay off their creditors, and give a portion of those funds to the trustee in the form of a commission. However, since Chapter 13 bankruptcy involves the reorganization of debts to avoid having to sell off property, Chapter 13 trustees are not paid from sales proceeds.
Instead, Chapter 13 trustees receive a portion of the funds you pay to them as part of your monthly repayment plan. This means that you do not need to make separate payments to cover your trustees fees during Chapter 13 bankruptcy. Simply pay the trustee according to the approved monthly repayment plan, and theyll take care of the rest.
A trustees compensation for administering a Chapter 13 bankruptcy case is limited by law to 10 percent of your monthly payments. In addition to accepting these fees as part of their salaries, trustees are expected to use the funds to cover case costs and any expenses associated with running their offices.
The yearly salary of a Chapter 13 trustee, minus any costs they incur, is limited to the maximum salary amount for federal government employees who earn Executive V level salaries plus benefits costs. As of , this salary cap was $160,100 before benefits.
What Is A Bankruptcy Trustee
A trustee is someone who has administrative control of property in trust. The trustee has a fiduciary duty to administer the property impartially for a person or business. A bankruptcy trustee is a special kind of trustee who oversees a bankruptcy case.
Bankruptcy cases are run by the federal court system under the Department of Justice , through special bankruptcy courts.
The DOJs U.S. Trustee Program selects bankruptcy trustees, who are private individuals with skills in business, accounting, management, and legal issues relating to bankruptcy. The Trustee program calls a bankruptcy trustee the watchdog over the bankruptcy process.
When someone files a bankruptcy case, if a trustee is needed, the Trustee Program appoints one to manage the case and the assets, depending on the type of bankruptcy. The trustee monitors the actions of the bankruptcy parties and makes sure the process is run in compliance with applicable laws and the bankruptcy plan.
The trustee is paid a fee for administering the bankruptcy. In addition, the trustee may be paid for reasonable expenses and also for compensation for their services, based on the bankruptcy type. In Chapter 7 or 11 bankruptcy, for example, the trustee is paid a commission on a percentage of the money disbursed to holders of secured claims and others.
Two statesNorth Carolina and Alabamahave bankruptcy administrators who perform similar functions that U.S. trustees do in the other 48 states.
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Eligibility For Chapter 13 Bankruptcy
Individuals are eligible for Chapter 13 relief if their unsecured debts are less than $419,275 and secured debts are less than $1,257,850. Amounts change every three years based on the consumer price index and the current numbers will remain in effect until April 2022.
Only individuals or husbands and wives who file jointly, are eligible for Chapter 13 bankruptcy. Businesses arent eligible for Chapter 13. They must file under Chapter 11 bankruptcy or Chapter 7.
Those wishing to file for Chapter 13 must prove that they have filed state and federal income taxes for the previous four years.
You cant file under Chapter 13, or any other chapter, if a previous bankruptcy petition was dismissed within the last 180 days because you failed to appear in court or comply with the orders of the court or if the petition was voluntarily dismissed by creditors.
Individuals must receive credit counseling from an EOUST-approved credit counseling agency, like InCharge Debt Solutions, at least 180 days prior to filing for Chapter 13. The EAOUST is the executive office for United States Trustees.
There are exceptions in emergency situations or where the U.S. Trustee has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required , it must be filed with the court.
Get Help From A Chapter 13 Bankruptcy Lawyer Now
The bankruptcy attorneys of Sasser Law Firm have represented thousands of chapter 13 debtors.
Our team is prepared to work with you even in the most complex and urgent situations. We have pursued favorable outcomes for clients with dire circumstances, such as imminent foreclosures and vehicle repossessions. The firm has represented chapter 13 debtors in multiple appeals to the US District Court and the Fourth Circuit Court of Appeals.
When you hire our firm, you will work directly with an attorney who can provide the advice and legal guidance you need to effectively pursue financial relief. You will not be passed off to a paralegal. You can expect honest, direct communication from our team at all times with no fine print or surprise fees.
We understand that filing for bankruptcy is a big decision. While it may be the best option for some, we know that its not right for everyone. Thats why we will never pressure you to file for Chapter 13 bankruptcy if youre not ready. We only want what is best for you, and we are here to support you no matter what you decide.
To learn more about how Sasser Law Firm can help with your North Carolina Chapter 13 bankruptcy case, contact us today for a free initial consultation.
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Welcome To The Website
Welcome to the website of Lauren A. Helbling, Chapter 13 Trustee. This site provides helpful information regarding the Trustee’s administration of Chapter 13 bankruptcy cases and answers common questions regarding Chapter 13 practice in the Northern District of Ohio – Eastern Division . The information presented here should not be construed to be legal advice. If you have legal questions, you should contact your attorney.
| Tuesday, January 1 |
| Monday, February 18 |
Office of the Chapter 13 TrusteeLauren A. Helbling, Trustee200 Public Square, Suite 3860Cleveland, Ohio 44114-2321
Send only correspondence to this addressPhone: 216-621-4268
Debtors may now make an online payment from a checking or savings account.
This address is for payments only. Do not send correspondence or documents to this address.
This payment method allows debtors to set up automatic monthly transfers from a checking or savings account. This form must be submitted to the Trustee.
Check with your attorney to find out if you are eligible for TFS Bill Pay.
TFS Bill Pay contact information:
888-729-2413 or www.tfsbillpay.com
For debtors, attorneys and creditors seeking bankruptcy case information.
This tool provides attorneys a secure method to deliver bankruptcy case documents to the Trustee.
Initial access to this portal is by invitation only.
