THE CHAPTER 13 PLAN
The Plan
Within 14 days after filing a Chapter 13 Petition, your bankruptcy attorney will prepare and file a Chapter 13 Plan which will propose a plan to pay your creditors on a monthly basis through a single monthly payment to the Chapter 13 Trustee. The Plan and the amount of your monthly payment to the Trustee is based on the income and expenses you provide to your bankruptcy attorney. The Chapter 13 Plan will include all of your regular monthly payments on secured items plus an amount for attorneys fees, arrearage on each account, trustee’s fees, and administration fees. You must show you have the ability to make these payments on the income and expense Schedules submitted with the Petition. You are required to review and sign your Plan before it is submitted to the Court.
Payments Under Your Plan
After the filing date, the Court will issue an Order Establishing Deadline for Making Payments. You must begin making Plan payments on the date set by the Order. Your name and case number must be written on all payments to the trustee to ensure accurate posting to your account and receipt of payment. Many people prefer to have their payments made through wage deductions at their place of employment. Your employer simply deducts your payment from your paycheck and sends it directly to the trustee. This procedure makes it easier for you to stay current under your Plan and eliminates cost of postage. Payment should be made by cashier’s check or money order. The Trustee will not accept personal checks. Even if the Court orders your employer to deduct Plan payments and send them to the Trustee, you are ultimately responsible for making sure all payments are made. If your employer fails to make a Plan payment deduction, you must tell your bankruptcy attorney and immediately send the payment to the Trustee by cashier’s check or money order. If you fail to make any Plan payment to the Trustee on time, the Trustee will file an affidavit of default and serve it upon you. Thereafter, you will have 21 days to make the overdue payment plus the next payment due under your Plan. Therefore, being late will cause you to make a total of two payments within the 21-day grace period in order to save your Chapter 13 bankruptcy.
Effect of Non-Payment
When a Chapter 13 case is dismissed for non-payment, the Court will enter an order prohibiting you from filing another Chapter 13 case for up to six (6) months. If one of your payments is late, the Trustee will issue an Affidavit of Non-Payment. In that event you will have 21 days from the date of the Affidavit to make all payments currently due plus any payments that come due within the 21-day period. The Trustee will often consider a Stipulation of a payment program to make up for the past due amounts over time, provided you pay the current payment and the next payment due under your Plan. If you do not pay the missed payments or enter into a payment program with the Trustee within the 21-day period after the Trustee’s Affidavit of Non-Payment, your Chapter 13 case will be dismissed for non-payments. These rules are strictly applied and enforced, and neither the Trustee nor the Court will consider excuses for your non-compliance.
Confirmation of Your Plan
The bankruptcy judge will evaluate and either confirm or deny, your bankruptcy plan at a confirmation hearing several months after you file your Chapter 13 case.
Amended Plans
An amended Plan may result in you having to pay a larger monthly payment to the Chapter 13 Trustee each month. In the event an amended Plan results in an increased monthly payment you are responsible to pay the difference for all months preceding the filing of the amended Plan. This difference must be paid in full prior to the confirmation hearing. Therefore, it is important for you to accurately report your payment and arrearage obligation amounts on your Questionnaire so that you will not be liable for significant payments after the filing of an amended plan.
Paying Your Creditors
In most cases you will pay all creditors through the Chapter 13 Plan. Typically, you will make no payments directly to the creditors after the filing of your case, and your first payment will be to the Chapter 13 Trustee when you are told by the Trustee’s office that the payment is due (usually 30 days after the filing of the original plan). You are able to pre-pay the Chapter 13 plan if you have enough money to do so.
Contact a Chapter 13 Lawyer at Dominguez & Associates, P.A.
|