Introduction to Chapter 13
The information in this section is provided to you prior to the First Meeting of Creditors in a pamphlet commonly referred to as "The Yellow Pamphlet." The information contains answers to most questions that arise during a Chapter 13 plan. Read the information completely to understand your obligations and responsibilities.
ALL CASES ARE REQUIRED TO BE PAYROLL DEDUCTION. Whenever possible Chapter 13 payments are made through a payroll deduction at your place of employment. It will be easier to remain current on your payments to the Trustee if the payment is automatically made on a regular basis by your employer. EMPLOYER PAYROLL DEDUCTIONS, MONEY ORDERS, AND CASHIER'S CHECKS MUST INCLUDE: (1) your NAME, (2) your ADDRESS (NOT REQUIRED IF PAID BY EMPLOYER), and (3) your CHAPTER 13 CASE NUMBER. DO NOT MAIL CASH OR BRING PAYMENTS DIRECTLY TO THE TRUSTEE'S OFFICE. Please make all payments payable to Office of the Chapter 13 Trustee, and forward all payments to:
Office of the Chapter 13 Trustee Alexandria
P.O. Box 279
Memphis, TN 38101-0279
DON'T FORGET YOUR CASE NUMBER!!!
<< Back to TopAt the time you filed your Chapter 13 petition, the Judge may have issued an order to your employer to deduct your plan payment from your paycheck and send it to the Chapter 13 Trustee. While you are under the protection of Chapter 13, this order PROHIBITS your employer from honoring any garnishments, including back taxes, except on-going child support, or as otherwise provided in the order. It is important that both you and your employer understand that such an order is NOT A GARNISHMENT.
A garnishment or attachment can come only from someone to whom you owe money. The Court is just carrying out its duty to administer the plan you voluntarily filed and in which you gave the Court jurisdiction over your future pay as long as you are in a Chapter 13 plan. Most employers understand that you are making a serious effort to repay your debts rather than avoid them. If your employer does not honor a wage deduction order, let your attorney and the Trustee's office know immediately so that the appropriate action may be taken. If your employer has any questions, he or she may call our office for an explanation at 318-448-1306 extension 215.
Obligation to Pay:
When the Court orders your employer to deduct plan payments and send them to the Trustee, you must remember that you have the obligation to make sure payments are made. If the plan payment is $500 a month and your employer only sends $350 a month, you are still responsible for sending the $150 a month. The law requires that payments be commenced within 30 days after petition has been filed.
Note: It may take several weeks for your payroll deduction to become effective. In the meantime, be sure to make your regular payments directly to the Trustee. The Judge's willingness to approve your plan will depend on the good faith effort you demonstrate by your payment record prior to the confirmation hearing. If your employer ever fails to make a payroll deduction, you must tell your attorney that the deduction was not made and you must send the needed plan payment to the Trustee by money order or cashier's check.
It is a good idea to keep your pay stubs to demonstrate that the deductions are taking place. If there is ever any discrepancy in your payment history, you will have the complete records demonstrating all the deductions that were made. PLEASE REMEMBER: If you ever receive a regular paycheck in which the Trustee payment was not withheld, you should immediately mail the payment yourself.
Failure to Pay:
If the Trustee's office fails to receive payments on your Chapter 13 plan, the Trustee or a creditor will seek to have your case dismissed. If something happens to your job, you become disabled, get laid off or get a better job, consult with your attorney at once. Your attorney may be able to counsel you on the best way to protect yourself during such time. In the role of administrator of Chapter 13 cases, the Trustee bears the dual responsibility of looking out for the interests of both debtors and creditors alike. Thus, whenever a debtor is substantially delinquent in payments under the plan, the Trustee will review the case for dismissal.
Adjustment of Payments:
It is extremely important for you to let us know if something interrupts your pay and makes it impossible for you to make payments to the Trustee. If a payment adjustment is required, please contact your attorney to review and revise your plan.
Note: If payments to the Trustee are authorized by the Court to be missed you are still required to pay the mortgage payment directly to the mortgage company.
Plan Length Information
It is not unusual for a plan to exceed the exact number of months it was originally scheduled to run. There are several reasons for this other than compensation and interest paid. It often happens that a creditor files for a larger amount than you thought you owed. Further, interest rates may be changed, or you may have forgotten a creditor which must be added to your plan. On the other hand, some creditors may not file a proof of claim; this may shorten the plan length.
It is most important to remember that the length is a close approximation at the beginning of your plan. The length is dependent on many factors which may change during the course of your plan. You may contact the Trustee's office if you have questions concerning your plan's length.
No plan is allowed to exceed sixty (60) months, the time limit for completion allowed by the Court. If this situation exists in your original plan, the Trustee will object to confirmation of the plan. Your attorney can help you in resolving this problem.
Contacts by Creditors:
All the creditors that you listed on your Chapter 13 petition are under an automatic restraining order which prohibits them from contacting you. If you get notices in the mail from your creditors, send them to your attorney. By the same token, you should not contact your creditors. Be sure you tell your attorney the name of the person who contacted you.
Balance Due Creditors:
You may not deal with a creditor, just as a creditor may not deal with you. You cannot pick and choose some particular creditor and pay him "on the side" because all of your debts must be dealt with through the Court. All creditors must be paid under the authority of the Court, by the terms of the law, and not by any personal desires. If you want to know how much you still owe a creditor, or all creditors, you may call our office and ask for a copy of the accounting of your case. The Trustee will mail you and your attorney a copy of your case report annually. This record will show the payments received by the Trustee and the amounts paid to each creditor over the twelve (12) month period.
Claims of Creditors:
While the creditors you list on your Chapter 13 petition are given the opportunity to file a claim for payment they must do so by the deadlines imposed by law. Approximately three months after your meeting of creditors, we will send you a complete list of every creditor who has filed a claim in your case and the amount which they claim you owed them. You should read and examine this list, called a "Trustee's Report of Claims Filed," very carefully. If a creditor is listed incorrectly or any amount claimed does not appear correct, you should contact your attorney at once. If a claim is marked "Not In The Plan", this creditor will not be paid. To have the creditor paid, please contact your attorney to file a modification of the plan to add the creditor. If a creditor does not file a claim within the time allowed and if you want that creditor paid in your Chapter 13 case, please have your attorney file a claim for the creditor.
Late Claims:
As noted above creditors must file a claim by the deadlines imposed by law. Generally, they are not entitled to payment if they file after that date or do not file a claim at all. Tax claims are an exception to this limit. If a creditor files after the time limit, a letter may be mailed to the debtor's attorney to get permission to pay the late filed proof of claim.
Creditors Not Listed:
Creditors not listed by you when you filed can cause quite a few problems. There are two kinds of unlisted creditors: those you owed money to when you filed and forgot to list ---we call them "not in the plan proofs of claims" --- and those creditors who have a bill that was incurred after you filed. We call this type "post-petition creditors." A letter will be mailed to the debtor and debtor's attorney to advise a modification of the plan to include the debt.
If you discover an unlisted creditor, one you owed but forgot to list, you must let your attorney know the details immediately. Your attorney can include this creditor in your plan and protect you. Post-petition creditors are rare because, except in emergency situations, you should incur no post-petition debt without the express prior approval of the Court. Post-petition debts should be brought to the attention of your attorney so that a review of your plan can be made. Should subsequent debts be added to your plan, a formal modification of your plan may be required which may call for an adjustment in your payment.
Contact by Creditor After Completion of a Chapter 13:
When a secured creditor has had his claim paid by Chapter 13, he should, and usually does, send the "paid in full" papers to you. Even if the creditor fails to do this, it is not too significant since the official records of the Court showing your plan is completely paid would overrule most claims. Should you receive any request for additional money after your plan is completed, contact your attorney.
<< Back to TopFederal bankruptcy law allows you to request that your Chapter 13 case be dismissed at any time. If you desire to stop your case, contact your attorney. However, you should understand that a dismissal will reactivate all unpaid or disputed debts, all interest, finance charges, all late charges not allowed by the court and all debts of creditors who did not file their claims. In addition, you will be forced to deal with those creditors on their terms, not yours or the Court's. The request for dismissal of your plan must be in writing. We urge you to give careful consideration to such a decision.
Stopping Payroll Deductions:
It is the Trustee's policy to cease payroll deductions as quickly as possible when a plan is completed. This is done during the month when the Trustee reviews a list of cases that are completed or nearing completion. However, to ensure that the Trustee has paid all claims filed by creditors with the Bankruptcy Court, a review of the Court's records is performed. On rare occasions, the court may receive a claim which the Trustee did not and, therefore, did not pay. Any additional claims will be scheduled for payment according to the terms of the Order Confirming the Plan. As soon as all claims are paid in full, the Trustee will notify your employer to stop the payroll deduction. Usually, there is a delay in processing these instructions, and your employer may remit one or two additional payments. These funds will be promptly returned to you in full.
When it appears that your case is completed, the Trustee's office will generate a "Notice of Plan Completion" letter. The letter will be mailed to you, your attorney, and all creditors explaining no additional payments are required. Creditors will be given 25 days to object to the completion of the plan. If no objections are filed, the Trustee's office will file the Notice of Plan Completion, Filing of Final Account and Notice of Proposed Closing of the Case with the United States Bankruptcy Court and mail a copy to you, your attorney, and all creditors listed with the case.
Discharge:
When you have successfully completed your plan payments, you will receive notice from the Court "discharging" you from your case. This discharge also acts as an injunction against your creditors, prohibiting them from taking unauthorized action against you after your case is ended.
You will receive a "Final Decree" signed by the Judge. Please retain the original and submit a copy of the final decree and a copy of the last confirmed plan and schedule F to the major credit reporting agencies. The information is required to update the creditors listed in the bankruptcy as paid. Without the plan and schedule F the credit reporting agencies are unable to update the creditors correctly.
<< Back to TopCredit Rating
Your credit rating during and after completion of Chapter 13 will be as it is now and was in the past, the personal opinion of any credit grantor who looks at your record. A credit rating is a record of your past credit performances. This record is made available to credit grantors, and they make up their minds, by their own standards, as to whether or not they want to grant credit to you. Suits, collections, attachments, straight bankruptcies and Chapter 13 are indications, in one degree or another, of credit problems. Any credit record that has been blemished by a problem must be gradually rebuilt.
Obtaining Credit:
You are required to notify and gain approval of the Court prior to obtaining credit once your bankruptcy case is filed. Should you need to obtain credit for a major purchase while in bankruptcy, please contact your attorney.
Disposable Income
You are required to submit all of your disposable income to the supervision and control of the Trustee unless you propose to pay all debts in full. If you should obtain additional income while in bankruptcy, part of those funds may need to be turned over to the Trustee for disbursement to your creditors pursuant to the provisions of your bankruptcy plan. The additional income could be a raise in wages from your employer, wages from a second job, lump sum from a lawsuit of any kind, inheritance from a relative or wrecked vehicle.
Report Plan Activity
Annually you will receive a Trustee's Periodic Report which includes all the financial activity on your case during the previous reporting period. This report will itemize all payments the Trustee has received from you as well as the amount disbursed to creditors.
<< Back to TopThe Trustee's office is not in a position to advise you on how to file your income tax return. However, a copy of the federal and state tax return is required to be submitted every calendar year.
Income Tax Refunds or Tax Pledge:
An income tax pledge is not required for most cases.