| What is going to happen now that
I filed a Chapter 13 Bankruptcy?
Since you have just filed a Chapter
13 Bankruptcy, you probably have a lot of questions! The following series
of "Questions and Answers" is provided to you only for purposes of introduction
and to give you some idea of what to expect. The Bankruptcy Code will determine
what actually happens in your case. You need to discuss your individual
concerns, legal rights, and specific questions about your particular situation
and how the Bankruptcy Code will affect your case with your attorney, Mr.
Gardner.
What is a Chapter 13 Bankruptcy
and how does it work?
Chapter 13 is one form of bankruptcy
in which you obtain relief from your creditors and submit a plan to pay
your debts over a period of generally not less than 36 months and not more
than 60 months. The Court prohibits your creditors from trying to collect
any money or recover property from you during the time you are in your
Chapter 13 plan. You must make a regular payment by Official Bank Check,
Cashier's Check, or Postal Money Order to the Chapter 13 Trustee within
30 days after filing your plan and payments must be for the period of time
designated in your plan. Your "first money" must be delivered to the Trustee
at your first court meeting. The money collected by the Chapter 13 Trustee
is disbursed to your creditors according to the plan after it is confirmed
by the Court.
Where is a Chapter 13 case filed?
Your Chapter 13 petition is filed
with the Clerk of the Bankruptcy Court in the (federal) District where
you have lived, had your principal place of business, or had your principal
assets located for the greater part of the last 180 days.
The Bankruptcy Court is a part of
the system of federal courts and is a special court that was created by
Congress just to hear cases and make decisions about disputes between debtors
and creditors involved in a bankruptcy case.
Your Chapter 13 Bankruptcy case has
been filed in the United States Bankruptcy Court for the Western District
of North Carolina. All papers may only be filed with the Clerk of the Bankruptcy
Court office, addressed as follows:
Clerk of the Court
United States Bankruptcy Court
P.O. Box 34189
Charlotte, NC 28234-4189
(704) 350-7500
Who are the bankruptcy judges?
The United States Bankruptcy Court
for the Western District of North Carolina currently has two (2) active
judges, one (1) recalled judge, three (3) Chapter 13 Trustees and five
(5) divisions:
| Judge |
Trustee |
Division |
| Marvin R. Wooten |
Steven G. Tate |
Shelby |
| J. Craig Whitley |
Steven G. Tate |
Wilkesboro |
| George R. Hodges and J. Craig Whitley |
Warren L. Tadlock |
Charlotte |
| George R. Hodges |
David G. Gray |
Asheville |
| George R. Hodges |
David G. Gray |
Bryson City |
Which counties are in the five
(5) divisions and where is court held for each division?
| Division |
Counties |
Court Location |
| Asheville |
Avery, Buncombe, Haywood, Henderson,
Madison, Mitchell, Transylvania and Yancey |
100 Otis Street, Room 112
Asheville, NC 28803
(828) 771-7300
FAX (828) 271-4150 |
| Bryson City |
Cherokee, Clay, Graham, Jackson,
Macon and McSwain |
100 Otis Street, Room 112
Asheville, NC 28803
(828) 771-7300
FAX (828) 271-4150 |
| Charlotte |
Anson, Gaston, Mecklenburg and Union |
401 West Trade Street
Charles Jonas Federal Building
Charlotte, NC 28202
(704) 350-7500
FAX (704) 344-6403 |
| Shelby |
Burke, Cleveland, Lincoln, McDowell,
Polk and Rutherford |
Cleveland County Courthouse
and Law Enforcement Center
Courtroom #5
100 Justice Place
Shelby, NC 28150 |
| Wilkesboro |
Alexander, Alleghany, Ashe, Caldwell,
Catawba, Iredell, Watauga and Wilkes |
Johnson J. Hayes Federal Building
207 West Main Street,
Second Floor, Room 201
Wilkesboro, NC |
What fees are charged in Chapter
13?
The Clerk of the Bankruptcy Court
charges a $194.00 filing fee when the case is filed. The standard Chapter
13 legal fee for a non-business case is $1,600.00 for all basic or "base
fee" services. These fees are established by federal law and local court
rules. Almost all additional or "non-base" fees are also paid under your
plan. The Chapter 13 Trustee receives an administrative fee of up to ten
percent (10%) of the amount paid under the plan.
How does the Trustee receive his
fees?
Fees for the Trustee are taken only
when a disbursement is made to your creditors, including your attorney.
The Trustee takes a small percentage of all money disbursed. The Trustee
continues to take fees until all of your creditors have been paid according
to your confirmed plan. Your annual financial reports issued by the Trustee
show you how much the Trustee has received to date.
Why is your Chapter 13 case number
important?
At the time your Chapter 13 petition
was filed, the Bankruptcy Clerk assigned you a seven digit case number.
The first two digits represent the year in which your case was filed. Your
case number is very important. You will need it whenever you call the Trustee's
office, when you make each payment to the Trustee your case number should
be clearly written or when you obtain information from the Clerk's office.
Your attorney has also assigned a four digit file number to your case for
his own records. You should use this number whenever you contact your attorney
about your case.
Your address & employer
The Trustee and your attorney need
to know your exact mailing address for as long as you are under Chapter
13. The Trustee has the address which you put on your petition, and the
Trustee will send all notices and annual reports to that address until
you or your attorney tell him to send them somewhere else. If you ever
move or change your mailing address, you must INFORM your ATTORNEY, the
COURT, and the TRUSTEE in WRITING of your new address. The Trustee also
needs to know your current employer's name and address.
"My friend went through bankruptcy
and he says..."
You have probably already received
or will receive advice on what to do from well-meaning friends and relatives
who have themselves experienced financial problems. Just like no two people
are alike, no two "Chapter 13 Bankruptcies" are alike. Take the advice
of your well-meaning friends and acquaintances with the proverbial "grain
of salt." If you have a specific question about anything related to your
bankruptcy, make it your rule to ASK YOUR ATTORNEY, and he will try to
provide you with an answer that applies to your special situation.
What should I expect my attorney
to do in a Chapter 13 Bankruptcy?
Exactly what you may expect of your
attorney will be governed by the fee agreement the two of you have made
and that has been filed with your case. Under the rules of the Bankruptcy
Court, your attorney must continue to appear and represent you until the
judge permits your attorney to withdraw from your case. Any attorney may
only withdraw from a case for "good cause" after proper notice to you.
Your attorney's function is to aid
and assist you in successfully completing your Chapter 13 plan. Your attorney
is there to answer any questions or concerns regarding your plan and the
legal consequences of your case. Remember, your attorney is your legal
advisor, not the Trustee. The Trustee and his staff are not allowed
to give you legal advice regarding your case.
What may I expect from the Chapter
13 Trustee?
The Chapter 13 Trustee offices are
open five (5) days a week, Monday through Friday. Mr. Tate and Mr. Gray
maintain office hours from 9:00 a.m. to 5:00 p.m. Mr. Tadlock's office
hours are 8:15 a.m. to 4:45 p.m. The Trustees follow the federal holiday
schedule. The Trustees' phone numbers are as follows:
| Trustee |
Phone Number |
| Steven G. Tate |
(704) 872-0068 |
| Warren L. Tadlock |
(704) 372-9650 |
| David G. Gray |
(828) 254-6315 |
The Trustee's main function is to
administer the funds received from you. If you have a question about your
plan's receipts and disbursements, you may wish to call the Trustee's office.
Trained phone service representatives are available during office hours
to answer your questions.
The Trustee is not able to talk
with you personally about your case. His staff is familiar with the
policies and guidelines of Chapter 13 and is well qualified to discuss
with you any problems you may have implementing your plan. Remember, however,
that the Trustee and his staff cannot and will not give you legal advice.
When will I have to appear in
court in a Chapter 13 case?
In the United States Bankruptcy Court
for the Western District of North Carolina, you will have to appear for
at least one court hearing generally known as the First Meeting of Creditors.
This meeting is conducted by the Chapter 13 Trustee. The bankruptcy judge
will not be attending this meeting. This meeting will be held within 30
to 60 days after your case is filed. You will be notified of the time,
date and place of this hearing by your attorney and by the Trustee. This
is a mandatory court appearance on your part. Your failure to appear at
this meeting will result in the dismissal of your Chapter 13 case.
Confirmation hearings (i.e., final
approval of your plan) are handled by your attorney and the Chapter 13
Trustee.
May I change to Chapter 7 if my
Chapter 13 case is still open?
Yes. A Chapter 13 case may be converted
to a Chapter 7 case at any time. You should contact your attorney if you
are considering converting your case. Additional legal and court fees must
be paid before a case can be converted to Chapter 7.
What effect does filing under
Chapter 13 have on lawsuits and attachments previously filed against me?
Under federal law, the filing of
a Chapter 13 case automatically stops or stays all lawsuits, attachments,
foreclosures, garnishments, repossessions, and other actions by creditors
against either you or your property. A few days after your case is filed,
a notice is mailed by your attorney and by the Trustee to all of your creditors
advising them of this automatic stay. The creditors may be notified sooner
by either you or your attorney if necessary.
Since you are now protected from
your creditors under the Federal Bankruptcy Laws of the United States of
America, please tell any of your creditors that contact you that you have
filed for Chapter 13 relief and that your attorney is O. Max Gardner III
of Shelby. You should also advise them to contact Mr. Gardner at (704)
487-0616. This is all you need to say to any creditor.
If you receive any verbal or written
demands from creditors more than two weeks from the date your case was
filed, please notify your attorney. If the contact is by telephone, then
you need to obtain the telephone number of the person calling you, the
name of the creditor or the collection agent, the mailing address for such
party, the name of the person who called you, and how much money they want
you to send. The best way to get this information is to "act stupid" and
"be nice." If the contact is by mail, then you need to save the envelope
for proof of the postmark date. You should notify your attorney of any
such contacts.
Please note that creditors who contact
you after being advised of your bankruptcy case are subject to various
sanctions for contempt of Court and other violations of Federal Law. In
many cases, the Bankruptcy Court will order such creditors to pay money
damages to you (including legal fees to your attorney) for such violations.
Your attorney always takes these cases on a contingency fee arrangement
as set forth in the fee disclosure agreement. In short, unless your attorney
recovers money damages from these creditors you will not owe him any additional
legal fees for pursuing these type claims. Please be assured that the Bankruptcy
Court takes these matters very seriously and that they are vigorously pursued
by Mr. Gardner.
Will my creditors be able to take
my wages or property while the Chapter 13 case is in effect?
No. The automatic stay described
in the previous question remains in effect during the entire Chapter 13
case and your creditors will not be permitted to take or otherwise proceed
against any of your property or assets, including your earnings. However,
if secured creditors to whom you are in default are not being paid under
the plan or if you are not making your direct home mortgage payments, these
creditors may go to the Bankruptcy Court and seek permission to repossess
the property upon which they have a valid lien. Creditors secured by vehicle
loans may also have your vehicle stored if you fail to maintain insurance
on the vehicle securing the loan.
There are some exceptions to this
general rule. The most common being child support, income tax refunds and
certain property tax situations. For example, the IRS may apply your tax
refund against any taxes included in your plan. The IRS must notify the
Trustee of this action, but it is otherwise lawful. Specific questions
regarding your situation and whether these exceptions apply to your case
should be discussed with your attorney.
May I repay some of my creditors
and not others under Chapter 13?
You cannot selectively "pick and
choose" some particular creditors and decide to pay them "on the side."
All of your debts must be dealt with through the Court. Any payments which
you make to a creditor 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 pay
creditors, you must do so through your Chapter 13 plan.
Are student loan debts dischargeable?
Most student loans are not discharged
in bankruptcy. You should refer more specific questions to your attorney.
How are debts that have been co-signed
or guaranteed by another person handled under Chapter 13?
If a consumer debt which has been
co-signed or guaranteed by another person is being paid off in full under
the Chapter 13 plan, the automatic stay that was entered when the case
was filed will prevent the creditor from collecting the debt from the other
person. However, the creditor may ask the Court's permission to collect
from the other person the portion of the debt that is not being paid off
under the plan.
The Trustee will only pay in full
those co-signed debts that are specifically provided for in your plan.
Please call your attorney if you have any questions.
What is required for court approval
of a Chapter 13 plan?
The Court will confirm a Chapter
13 plan if:
(a) the plan complies with the requirements
of Chapter 13 generally;
(b) all required fees, charges, deposits
and payments have been made;
(c) the plan has been proposed in
good faith;
(d) each secured creditor is allowed
to retain his lien on his collateral and is paid the full amount of the
secured claim under the plan;
(e) each unsecured creditor will
receive under the plan at least as much as the creditor would have received
if you had filed a Chapter 7; and
(f) it appears that the debtor will
be able to make the required payments and to comply with the plan.
What if the court does not approve
my Chapter 13 plan?
If the Court does not confirm the
Chapter 13 plan you have proposed, it will usually state the reasons for
such disapproval so that the plan may be appropriately modified, amended,
converted to a Chapter 7 or dismissed. Once a case is dismissed, your creditors
may again pursue the collection of your debts. Mr. Gardner will not file
a Chapter 13 case unless he is very confident the plan will be approved
by the Court.
When must the Chapter 13 payments
begin and how often must they be made?
A first payment must be made to the
Chapter 13 Trustee within thirty (30) days of filing your bankruptcy plan.
This payment (whether one, one and a half or two full monthly payments)
is delivered to the Trustee at the First Meeting of Creditors. After the
first meeting, your plan payments should be sent only to the Trustee's
payment address. Be sure to keep the receipt for each payment. If your
case is up for a motion or hearing in court, please give your attorney
a copy of the payment receipt to prove the payment. Do not send your payments
to the Clerk of the Bankruptcy Court or to your attorney.
All payments must be in the form
of bank money order, postal money order or cashier's check. Be sure to
include your name, address, and your bankruptcy case number on the money
order or check. The Chapter 13 Trustee's office cannot accept cash payments
or personal checks.
Payroll deduction orders
You may find it easier to have your
employer deduct your plan payments from your paycheck. This is strictly
voluntary. However, if you fall behind in your plan payments, the judge
may order your employer to deduct your plan payments from your paycheck.
It is important that both you and your employer understand that such an
order is not a garnishment. If your employer has any questions, he or she
should contact your employer's legal counsel. Be sure to notify the Trustee
if you change or terminate your employment.
What if I am temporarily unable
to make my Chapter 13 payments?
It is very important to contact your
attorney if you ever expect to miss a payment due to layoff, medical disability,
etc. If you are temporarily out of work, injured, or otherwise unable to
make the payments required under the Chapter 13 plan, the Court may upon
proper application allow you to suspend payments for a period of time.
If it appears that your inability to make the required payments will continue
for an extended period, you may be permitted to amend your plan, or the
case may be dismissed or converted to Chapter 7. Remember -- the Trustee's
office has no authority to let you miss a payment or allow you to pay less
than your plan requires. Only the judge can make such a decision. Your
lawyer can ask the judge to change the requirements of your plan if you
feel that you cannot meet the obligations of your plan.
May I make a higher payment than
is required under the plan?
If you are ever in a position to
increase your plan payments to the Trustee, you should contact your attorney
for advice on prepaying your plan payments. You may send extra monthly
payments to the Trustee, however, at any time. If you want to simply pay-off
your plan early you may do so but call your attorney first.
What if I later decide that I
no longer want to make payments and to continue with the Chapter 13 plan?
Federal bankruptcy law allows the
debtor to either dismiss a Chapter 13 case or to convert it to Chapter
7 at any time, unless your case has previously been converted from another
chapter of the Bankruptcy Code. No one can force you to remain under a
Chapter 13 plan if you do not wish to remain. If you desire to stop your
case, contact your attorney.
However, if you simply stop making
the Chapter 13 payments, any creditor in your case may ask the Court to
dismiss your case. The Trustee will ask the Court to dismiss your case
or place you on payroll deductions if:
(1) you fail to make your first payment(s)at
the First Meeting of Creditors; and/or
(2) if you fail to make your required
payments regularly during any months of your plan.
You should understand that a dismissal
will reactivate all unpaid or disputed debts, all interest, finance charges,
legal fees, all late charges not allowed by the Bankruptcy Court, and all
debts of creditors who did not file their claims. Consider also that you
will be forced to deal with those creditors on their terms, not yours or
the Court's.
How do I find out how much is
owed to creditors under my plan?
The Trustee's office will send you
a yearly report of what has been paid to all your creditors. Be sure to
review this report carefully and contact your attorney immediately if you
have any questions or concerns. The report will list the creditor's claim
amount and the amount paid to date to each of your creditors. The balance
due on your plan is noted at the top of the report. Also, it is possible
that one or more of your creditors is receiving interest and therefore
the balance will change from month to month. The balance due is, therefore,
only an approximate figure.
How are the claims of creditors
handled under Chapter 13?
Unsecured creditors must file their
claim with the Chapter 13 Trustee within 90 days after the first date set
for the First Meeting of Creditors in order for their claims to be allowed.
Government agencies have 180 days from the date of filing to file their
claims. If an unsecured creditor fails to file their claim within this
time period, the Trustee will bring a motion objecting to the late claim.
If the claim is disallowed or not filed, then the creditor will not be
paid by the Trustee and the debt will be discharged or canceled upon the
completion of the plan.
A secured creditor can file a claim
at any time while your case is open. A creditor must file a claim in order
to be paid. The Trustee pays the amount claimed by the creditor, not the
amount you state in your petition. If you disagree with the creditor's
claim amount, you should contact your attorney. The debtor may file a claim
on behalf of a creditor if he or she wishes to do so. A creditor may file
an amended claim increasing or decreasing the claim amount at any time.
How are creditors paid?
The money which you pay to the Trustee
is used to pay expenses of administration, including payments to your attorney,
and payments to your creditors. So that you will have some idea as to how
the creditors are paid, you should understand that there are three (3)
basic types of claims: priority (such as tax claims), secured (holding
liens on property) and unsecured (consumer debt with no liens on property).
Generally, your Trustee will pay secured creditors first, then administrative
costs, then priority and finally unsecured.
What happens to creditors who
were not listed on my schedules?
Creditors not listed by you when
you filed can create some potential problems. There are two (2) kinds of
unlisted creditors: those who were owed money at the time of your filing
but were forgotten ("unlisted creditors"), and those creditors who have
a bill that was incurred after you file ("post-petition creditors"). If
you find an unlisted creditor, you should let your lawyer know the details
immediately.
What if I don't agree with how
much a creditor is receiving?
The Trustee pays creditors the amount
listed on their proofs of claim. If you disagree with the amount a creditor
claims you owe then contact your attorney.
Can I incur new debt after I file
my Chapter 13 plan?
You may find yourself in a situation
where you need to incur additional debt after you have filed your Chapter
13 plan. The following are the guidelines on incurring additional credit
provided by the Bankruptcy Code:
(1) the debt must be for consumer
debt and "for a property or services necessary for the debtor's performance
under the plan";
(2) you must be able to prove you
have the ability to pay the debt; and
(3) the Court must approve or deny
such additional credit. Court approval requires the filing of a motion
and notice to your creditors. If you wish to secure such credit, contact
your attorney.
Will a Chapter 13 bankruptcy affect
my credit rating?
Your credit rating during and after
completion of Chapter 13 will ultimately be based upon the personal opinion
of any credit-grantor who looks over your credit record. Your credit record
is a record of all your past credit performances. This record is made available
to a creditor, and he or she makes up his or her own mind, by his or her
own standards, as to whether or not he or she wants to grant credit to
you.
Your bankruptcy will remain on your
credit report anywhere from 7 to 10 years, depending on the credit reporting
agency's policy. The maximum time it can be reported is 10 years.
What happens when all payments
have been completed?
Once enough money has been paid to
the Trustee to complete all of your required payments, the Trustee will
begin the process of closing your case. The closing process normally takes
6 to 8 weeks and is completed in the following order:
(1) Court Audit. The Trustee's
office verifies that all claims filed in your case were paid correctly
and all court orders were property administered. If any problem is discovered,
you and your attorney are notified.
(2) Stop Payment. The Trustee's
office directs you or your employer to stop making plan payments. This
will not be done until after the court audit is completed successfully.
(3) Final Report. The Trustee's
office prepares a final report for the judge.
(4) Court Date. The Trustee
schedules your case for final review by the judge. You do not have to appear
for this final hearing.
(5) Case Discharged. The judge
signs an order discharging you from your scheduled debts.
(6) Notice of Discharge. The
Trustee sends a notice to you, to your attorney and to your creditors.
This tells you when your case was discharged by the judge.
(7) Refund. After the judge
discharges your case, you receive a refund from the Trustee if there is
money remaining in your case.
How do I inform the credit agencies
of my Chapter 13 completion?
You and your attorney will both receive
copies of the discharge order. Approximately four to six weeks after the
judge has discharged your case, your discharge papers will also be available
at the courthouse. This legal document states that you have been discharged
from your scheduled debts. The Trustee will not have copies of your discharge
papers. The courthouse is located at:
Charles R. Jonas Federal Bldg.
Room 111
401 West Trade Street
Charlotte, NC 28202
(704) 350-7500
If you subsequently lose or misplace
your discharge order, you may obtain a certified copy from the court. However,
the Bankruptcy Court does not take requests for copies over the phone.
Requests may be in writing in care of the correspondence department or
made in person. If you go in person, you must have your bankruptcy case
number, picture identification and money (50 cents per page) for photocopies.
Make several copies of your discharge
papers, and send copies to the three major credit bureaus:
TRW Consumer Assistance
P.O. Box 2350
Chatsworth, CA 91313-2350
(800) 392-1122
Transunion Credit Information Co.
c/o Consumer Relations
8200 E. 32nd Street N.
Wichita, KS 67226
(312) 408-1050 for information
Equifax
P.O. Box 105873
Atlanta, GA 30348
(800) 685-1111
Fax (404) 612-3150
Where do I obtain title to my
property after completion of my Chapter 13?
When a creditor has had his claim
paid by Chapter 13, whether partially or in full, he should, and usually
does, send the "paid-in full" papers to you. Contact the creditor holding
title, not the Trustee's office, to obtain your titles. If you have any
problems, contact your attorney. Creditors who refuse to deliver titles
may violate the bankruptcy laws.
What does the Chapter 13 Trustee
expect of me?
The Trustee expects you to be cooperative
and truthful. He also expects you to ask questions when you do not understand
any aspects about the administration of your case. Please notify him promptly
whenever you change your address, telephone number, or employment status.
Do not incur new debts, sell any property or enter into any leases without
the court first approving it. Finally, the Trustee expects you to handle
your payments in a prompt, regular and business-like manner. |
