Call for free book on Chapter 7 and Chapter 13: 615-255-3549
- Introduction
- Your Case Number
- Your Address
- Your Telephone Number
- Chapter 13 Payments
- Paying More Than Required
- Calls To The Trustee's Office
- Payroll Deduction Orders
- Tax Refunds
- Obligation To Pay
- Co-Signers and Co-Makers
- Right to Setoff
- Criminal Prosecution and Chapter 13
- Student Loans
- Contacts By Creditors
- Dealing With Creditors
- Creditors Not Listed
- Claims Of Creditors
- Late Claims
- How Creditors Are Paid
- Balance Due Creditors Letter
- Borrowing Money
- Substitution Of Collateral
- Surrendering Collateral
- Surrendering Real Estate
- Selling Or Transferring Your Property
- Suspension of Payments
- Dismissal
- Request For Dismissal By You
- Personal Injury, Worker's Compensation, & Chapter 13
- When You Are Through
- Contact By Creditors After Completion of Chapter 13
- Credit Rating
- Credit Repair
- Leases
- Modifications By A Creditor Or The Chapter 13 Trustee
- Dealing With Your Attorney
- Final Word
INTRODUCTION
Chapter 13 is one method under the Bankruptcy Code to obtain relief from your creditors while at the same time providing a fair means to pay them back as much as you can. It allows you to keep some of all of you property during the time you are paying creditors back and it permits you to modify some contract payments and interest rates. Your plan can eliminate late charges and penalties and allows you to extend payments on some of your debts. Chapter 13 has gained widespread acceptance across the country as an attractive alternative to straight (Chapter 7) bankruptcy.
YOUR CASE NUMBER
At the time that you Chapter 13 petition is filed, the Bankruptcy Court Clerk assigns the case number. This number is very important. You will need it whenever you write or telephone the Trustee's office or when you make a payment to the Trustee. You should write your case number in the space provided at the front of this booklet so that you will always know where to find it.
YOUR ADDRESS
The Trustee's office and Mr. Flexer's office need to know your EXACT mailing address for as long as your are under your Chapter 13 plan. The Trustee's office and Mr. Flexer's office have the address which you put on your petition and all notices will be sent to that address until you tell Mr. Flexer's office to send them somewhere else. If you ever move or change your mailing address, you must inform us (Mr. Flexer's office) immediately of your new address. Mr. Flexer's office must be notified immediately in writing. We will inform the Court and the Trustee for you. Also, call Mr. Flexer's office to confirm that we have your correct address.
YOUR TELEPHONE NUMBER
If you change telephone numbers or obtain an unlisted telephone number, Mr. Flexer's office must be notified immediately in writing. Also, call Mr. Flexer's office to confirm that we have your correct telephone number.
CHAPTER 13 PAYMENTS
Most Chapter 13 payments are made through payroll deduction at your place of employment. Only in unusual circumstances will the Court allow payments to be made directly to the Trustee instead of by payroll deduction order. Should you make a plan payment personally, do so by money order, postal order or cashier's check, and be sure to include your full name, address and your Chapter 13 case number. DO NOT SEND PERSONAL CHECKS OR CASH. Payments must be received by the Trustee by the 20th of the month. The Trustee's office is on the 3rd Floor of the St. Cloud Corner Building at 5th Avenue and Church Street in downtown Nashville.
PAYING MORE THAN REQUIRED
If you are ever in a position where you wish to increase your payments to the Trustee, even if it is only a few dollars a week, this can have a big impact on your finishing ahead of time. Paying a little more than required will reduce interest costs, administrative expenses, and cause the payroll deduction to stop that much sooner. If you ever wish to increase your plan payments, contact Mr. Flexer's office. If you wish to make a single extra payment, you may do that by sending a money order or a cashier's check to the Trustee. Be sure to include your case number and full name on any payment that you send directly to the Trustee, as that is the only way to insure that the money is paid to your creditors. Sending extra payments to the Trustee will cause your plan to be shorter, as will sending your Income Tax Refund to the Trustee as part of your plan payment. Even if you send extra money to the Trustee, you will still be required to pay the full amount of your plan payment each and every month in the future.
CALLS TO THE TRUSTEE'S OFFICE
The Chapter 13 Trustee's telephone number is (615) 244-1101. The office is open five (5) days a week from 9:00 a.m. to 4:00 p.m.. Do not feel that you must talk personally with the Trustee, the staff is familiar with the policies and guidelines under Chapter 13 and are well qualified to discuss with you any problems or questions that may arise. The Trustee and his staff cannot give any legal advice however, and I encourage you to direct all legal questions to my office.
PAYROLL DEDUCTION ORDERS
At the time you file your Chapter 13 petition, the Judge will issue an order to your employer telling your employer to deduct your plan payments from your paycheck and send it to the Chapter 13 Trustee. 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, and you do not owe the Court or the Trustee any money. The Court is just carrying out its duty to administer the plan that you voluntarily filed and the Court has exclusive jurisdiction over your future pay as long as you are in a Chapter 13 plan. We find that most employers understand that you are making a serious effort to pay your debts instead of avoiding them and think more highly of an employee who seeks to pay his or her debts. If your employer has any questions, he or she may call the Chapter 13 Trustee's office for an explanation.
TAX REFUNDS
If you are paying less than twenty (20) percent of your unsecured debt, the Chapter 13 Trustee requires you to submit any tax returns you would have received during the Chapter 13 to your Chapter 13 plan to increase the dividend to unsecured creditors. There are no exceptions. This tax refund increases your "base", the total amount you pay the Chapter 13 Trustee. Seizing your tax refund does not reduce the time you have to stay in Chapter 13.
OBLIGATION TO PAY
Even though the Court will usually order your employer to deduct plan payments and send them to the Trustee, you must remember that you have an obligation to make sure payments are made. If your employer ever fails to make a plan payment deduction, you must notify Mr. Flexer's office in writing that the deduction was not made and you must send or hand deliver the plan payment to the Trustee by money order, postal order or cashier's check. You must keep your pay stubs to demonstrate that the deductions are taking place. If a payment is not received by the Trustee as required by your plan, any creditor in your case may ask the Court to dismiss the case. The Trustee will ask the Court to dismiss your case if you fail to make the required payments during any month during your plan. Chapter 13 is a last resort. Accordingly, your performance has to be close to perfect. If your income is really not stable enough or you don't have the self-discipline to comply with your plan, do not file. You will simply be making yourself miserable trying to keep property which you simply cannot afford.
CO-SIGNERS AND CO-MAKERS
A Co-signer, Co-maker or Guarantor on any of your consumer debts is generally protected from contact by the creditor by a "Co-debtor Stay". This automatic protection applies only in Chapter 13 cases. If the co-signer, co-maker or guarantor has given collateral for the loan, the creditor must request a hearing before the Judge in order to proceed against the property. The Co-debtor Stay will only protect co-signers, co-makers, and guarantors for the amount of debt your plan proposes to pay. If you plan is not scheduled to pay all of the co-signed debt in full, a creditor may obtain permission to collect from the co-signer, co-maker, or guarantor the portion of the debt that is not being paid through your plan. The co-makers credit can be affected negatively by your filing a Chapter 13.
RIGHT TO SETOFF
A bank savings and loan, credit union, or other institution in which you have a deposit, is allowed to take the deposit and setoff against any outstanding debt you have with that institution. Accordingly, if you have a deposit with a financial institution with which you also have a debt, you need to take immediate steps to remove your funds if you want to keep those funds. The financial institution may setoff all funds which were in the account at the time you filed your bankruptcy petition. We, therefore, recommend that you not make further deposits into an account with a financial institution with which you also have a debt or that you write additional checks form that account if you are going to close that account. Rather, you should open an account with another financial institution with whom you do not have a debt.
CRIMINAL PROSECUTION AND CHAPTER 13
Chapter 13 DOES NOT stop criminal prosecution. This means that if you have written bad checks (the most common example of a crime), the party to whom you wrote the bad check could still have you arrested and criminally prosecuted if you, in fact, committed the crime. This applies to traffic ticket fines and court costs, failure to return rental property, and every other crime of any kind.
Also, while criminal restitution, probation fees and court costs can be paid through the Chapter 13 plan, a state court (i.e., Criminal Court, Circuit Court, or General Sessions Court), can revoke your probation for not timely paying these fees and put you in jail, at least according to one recent Federal Bankruptcy Court case. Therefore, filing Bankruptcy is not an instant solution to your criminal case, and it is HIGHLY RECOMMENDED that you hire a competent attorney who handles criminal cases or seek the aid of a Public Defender, if you qualify. Normally, criminal courts will be satisfied if you pay these criminal costs and fees through your Chapter 13 plan, but please keep in mind STATE COURTS DO NOT HAVE TO PARTICIPATE AND CAN ATTEMPT TO REVOKE YOUR PROBATION AND PROSECUTE YOU.
STUDENT LOANS
Student loans are not discharged. If you do not provide sufficient funds to pay these loans off in full during the life of your plan, the balance will still be owed after you receive a discharge. Interest continues to accrue on a student loan during the course of a Chapter 13 plan.
If you cannot afford a plan that pays the student loan in full, you can pay a portion of the loan during the life of the plan and the unpaid balance will still be owed following your discharge. Interest will continue to accrue.
There is an "Undue Hardship" exception to the nondischargeability of student loans. This exception is reserved for extremely unusual cases and there are strict guidelines that must be met before it will be applied.
CONTACTS BY CREDITORS
All the creditors that you listed on your Chapter 13 petition are under an automatic restraining order which prohibits them from bothering you in any way. If you get notices in the mail from your creditors, make a copy for your records, send the original back to the creditor with Mr. Flexer's name, address and telephone number, let them know that you are in a Chapter 13 and give them your case number. Delinquent notices need not cause any great concern, but if you get a more personal, direct contact from a creditor, such as a telephone call, a personal letter, a summons, or a visit in person, you should immediately inform them that you are under Chapter 13 and give them Mr. Flexer's name and address. Be sure you tell Mr. Flexer's office the name of the person who contacted you. Mr. Flexer will want to follow up on such a call, therefore, the name of the person who called you and their telephone number is very important for us to try to take any corrective actions.
DEALING WITH CREDITORS
You cannot pick and choose a particular creditor and pay him "on the side", because all of your debts must be dealt with through the Court. Any payment which you make to a creditor outside the Chapter 13 plan may well be illegal. 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 pay creditors, you must do so through your Chapter 13 plan.
CREDITORS NOT LISTED
Creditors not listed by you when you filed can cause quite a few problems. There are two kinds of unlisted creditors:
1. Unlisted Creditors: Those you owed money to when you filed, but forgot to list.
2. Post-Petition Creditors: Those debts you incurred after you filed your petition.
If you find an unlisted creditor, you should make an appointment with Mr. Flexer's office immediately. Time is very important here, so do not delay if one shows up. Post-petition Creditors are rare because you cannot borrow money or run up a bill while under Chapter 13. Post-petition debts should be brought to the attention of Mr. Flexer's office immediately so that a review of your case can be made. Certain unanticipated medical expenses may then be included in your petition. If you incur debts without Court permission, after you file Chapter 13, unless the debts are medical bills, the Trustee can ask the Court to dismiss your case. You cannot trade in a car, buy a car on time, borrow from a loan company or rent-to-own without Court permission. If you do, the Court may very well dismiss your case. The Court will normally not let you enter into rent-to-own contracts after you file your Chapter 13. You also cannot get behind on your rent while you are in Chapter 13, and you must pay all future federal income taxes on time while you are in Chapter 13. Incurring debt without Court permission is grounds to dismiss your case.
CLAIMS OF CREDITORS
While every creditor which you list on your Chapter 13 petition is given the opportunity to file a claim for payment, a government entity has 180 days to file a claim. Creditors are allowed only ninety (90) days from the Meeting of Creditors to file their claim for payment. After you have been under the plan for about four months, we will send you a complete list of every creditor who has filed a claim in your case and the amount which they claim that you owe them. You should read and examine this list, called a "Motion to Allow Claim" very carefully. If a creditor is listed incorrectly or any amount claimed appears incorrect, you should contact Mr. Flexer's office at once. Unless a claim is objected to, the Court will pay the creditor the amount requested, not the amount listed on your petition.
LATE CLAIMS
As noted above, except for governmental entities, creditors have ninety (90) days after the Meeting of Creditors to file their claims for payment. Generally, they are not entitled to payment if they file after that date, or they will be treated as a subordinated class of debt. However, recent Bankruptcy Court decisions do not limit when a creditor can file a proof of claim. If the Court receives a claim after that time, they will send you a notice called a "Motion to Allow Additional Claim". If you do not want the Trustee to make the payments to this creditor, you must come to Mr. Flexer's office, sign an affidavit stating why you object to the claim. Generally, any claim which is not allowed will not be paid, and if you complete your plan, any claim that is not allowed or not filed will be discharged. This does not include payments such as alimony, child support, and taxes.
HOW CREDITORS ARE PAID
The money which you pay to the Trustee is used to pay the expenses of the administration, including payment to the attorney, and then to the creditors. There are three basic types of claims:
1. Priority - Administrative Costs, Attorney Fees, and Federal Taxes Owed.
2. Secured - Creditors with claims on your property, such as your home or car.
3. Unsecured - Everyone else.
The Trustee's office does not pay anything to unsecured creditors until the priority claims and secured claims are current in monthly payments. Due to this, it can be come time before any payments are made to unsecured creditors.
BALANCE DUE CREDITORS LETTER
Most people are very interested in knowing how much they owe to their creditors and how much they have left to pay on their Chapter 13 plan. If you want to find out how much each creditor is owed and what your payoff balance is on your Chapter 13 plan, please write to the Trustee's office and ask for a "Debtor Balance Letter." The Trustee's office will send you a letter listing all of your debts and the balance due to each of your creditors at that time. The Trustee's office will send you such a letter up to twice a year. If you want to see your record more often, you may visit the Trustee's office to look at the record of your case. The "Debtor Balance Letter" will not include any unmatured interest which your plan requires you to pay. It is only an approximate figure. Mr. Flexer's office can also send you an "Attorneys Status Letter" at any time. These requests should be made in writing and take approximately ten days to process.
BORROWING MONEY
Obtaining credit without permission of the Court is not only a violation of the Court's order, it is subject to reversal by the Court. Any credit purchase that you make without approval of the Court would be illegal, the goods would have to be returned and you very likely would be out any payment you had made. You would also place your plan in serious jeopardy if you obtain credit without approval. To obtain Court permission to borrow money, you must make an appointment with Mr. Flexer's office and at that time have with you the amount of money you are attempting to borrow, the interest rate and the monthly payment. You will have to sign an updated budget at this appointment. If you case is a joint case, both parties must be present for the appointment.
SUBSTITUTION OF COLLATERAL
If you are paying for your car in your Chapter 13 and you wreck your car, there normally will be insurance proceeds. Often the Court will allow you to use the insurance proceeds to repair the car or, if the car is a total loss, to purchase a replacement automobile with the insurance money.
We normally have to file a motion with the Court asking permission to use the insurance proceeds. There is a twenty (20) day waiting period to give the lien holder or Trustee an opportunity to object. Normally, these motions can be worked out if the parties cooperate. If this should happen to you, please CONTACT OUR OFFICE.
SURRENDERING COLLATERAL
Ordinarily, the law will not force a creditor to pick up collateral you surrendered in your bankruptcy. If you surrender property to the estate and/or the creditor, the creditor does not have to reclaim the collateral. This situation is most common with old automobiles of little or no value. It may be necessary for you to tow the collateral to the creditor or to a local agent or representative of the creditor, or you may have to call the codes department in your county to have them pick up the collateral. It is outside of the services which we provide to deal with these situations.
SURRENDERING REAL ESTATE
When you surrender your house to the Bankruptcy estate, your Ch. 7 trustee will review the mortgage (deed of trust) on the property to make sure it is valid, and the Chapter 7 Trustee will also examine the value of the property to determine how much equity is in the property.
If the deed of trust is valid, perfected, and there is not enough equity in the property to recover assets for your Bankruptcy estate, the Chapter 7 Trustee will abandon the property to mortgage company (or companies depending on how many mortgages you have on the property).
If the property is abandoned to the mortgage company, that company will then foreclose of the property unless you enter an agreement with them to accept a deed in lieu of foreclosure. A deed in lieu of foreclosure is an agreement of deed allowing you to give back whatever interest you have in the property rather than foreclosing. Ordinarily, in a typical deed in lieu of foreclosure, the mortgage company agrees to not try to collect a deficiency. In Bankruptcy, the collection of a deficiency is usually not an issue because the Chapter 7 discharges any potential deficiency. There also can be tax consequences to a deed in lieu of foreclosure. We are not tax attorneys or certified public accountants and do not give tax advice regarding such a transfer. We also do not negotiate a deed in lieu of foreclosure as part of our services. If you elect to explore a deed in lieu of foreclosure, you will need to contact your mortgage company and request such an arrangement. Ordinarily, the mortgage company will be familiar with a deed in lieu of foreclosure.
If you do not enter a deed in lieu of foreclosure, the property is sold at foreclosure sale by the holder of the mortgage. Many times if there is a guarantor of the mortgage, (such as FHA, VA, HUD, etc) the mortgage company assigns or transfers the mortgage to the guarantor (FHA, VA, HUD, etc) and the guarantor will foreclose on the mortgage. The point is that you may surrender real estate to the Bankruptcy trustee, but it may be many months before the property is actually sold at foreclosure. The foreclosure can be reported on your credit report pursuant to a federal law known as the Fair Credit Reporting Act when the foreclosure sale occurs, even if the foreclosure sale is many months or a year or more after you filed Bankruptcy. This is a limited effort to explain some fundamental concepts of surrendering property in Chapter 7 Bankruptcy and does not cover all of the numerous issues involved with real estate and Chapter 7 Bankruptcy.
SELLING OR TRANSFERRING YOUR PROPERTY
You cannot transfer or dispense of your property, including land, without Court approval. If you dispose of your property without Court permission, the transaction may be set aside. If you want to sell your property, trade in a car, or sell your home, be sure to discuss it with your attorney.
The Law Offices of James A. Flexer represents only you. Mr. Flexer's office will not give legal advice to creditors, real estate agents, mortgage brokers, attorneys representing you in other matters, nor to any other professional retained by you. If you retain a professional of any type they should be familiar with Bankruptcy matters or hire their own attorney if they need legal advice.
SUSPENSION OF PAYMENTS
Occasionally, during the life of your Chapter 13 plan, you may be out of work, sick, or have other reasons why you cannot pay the Chapter 13 Trustee. When this occurs, you must contact Mr. Flexer's office and set an appointment to come into the office in person (if a joint case, both parties must come to the office), and support your request to stop or suspend your payments with a signed budget reflecting that you cannot pay the Chapter 13 Trustee for a short period of time. (1 month, 2 months, usually 3 months under extremely unusual circumstances).
A suspension of payments is a last resort after you have exhausted all other avenues of paying your plan. When you went into Chapter 13, you were in a difficult financial situation. The Court will very closely look at whether you deserve a suspension if there is an objection. Many times the Court will rule that they will grant your suspension, but you can never miss another payment in your Chapter 13. Also, you can successfully suspend your payments and a creditor who did not object to the suspension can then file a Motion for Relief from the Automatic Stay to try to get permission to foreclose or repossess your property. Even though you obtained a suspension, the Court will many times look very closely at whether or not to give them permission to foreclose or repossess your property, simply because you were unable to make payments. The success or failure of a Chapter 13 depends on your ability to continue to make regular payments during good times and bad. If at all possible, it is best to never request a suspension of payments. Although it may provide some very temporary relief, it normally has many negative consequences. Nonetheless, if after exhausting all remedies and you have no other choice but to attempt to suspend your payments, then you will have to make such a request.
Of course, creditors can object to your request for a suspension of payments and many times do object if their property (such as a home, car, etc.) is being paid through the plan. A hearing is set when there is an objection to your request to suspend payments and the Bankruptcy Judge decides whether or not to grant the suspension of payments. Normally, a request for a suspension is filed, all creditors are given notice of the request to suspend, and the creditors are given twenty (20) days to object. If no creditor objects, we submit an Order granting the suspension and a copy is sent to your employer to stop the payroll deduction, or if your plan is direct pay, you will be given notice that you can stop making payments during the term of the suspension. Therefore, from the time you come to the office to request a suspension until the suspension is granted by the Court Order, even if there is no objection, the process takes approximately thirty (30) days.
In order for us to file a Motion to Suspend your payments, it is necessary that we have a sufficient factual basis. This requires you to provide us at your appointment written proof in support of your request for a suspension. In other words, if you are requesting a suspension for medical reasons, we will need a detailed letter from your physician detailing specific dates that you will be out of work, and when you will be able to return to work. If you are claiming lack of work or unemployment as the reason for your suspension, we will need at least three written job applications with telephone numbers where we can confirm applications for employment have been requested. These are just two examples. Depending on your factual circumstances, it will be necessary for you to bring written proof of your reason for a suspension. We attach such proof to your request for a suspension to support your position.
Chapter 13 is for individuals with regular income. If your income is not sufficient and stable enough to support a plan, you may need to consider voluntarily dismissing your Chapter 13 or converting to Chapter 7. Please schedule an appointment with Mr. Flexer's office should you wish to discuss these options.
DISMISSAL
If you fail to make your payments to the Trustee as required by your plan, the Trustee will ask the Court to dismiss your case. It is very important to contact Mr. Flexer's office if you ever expect to miss a payment due to being laid off, being medically disabled or because you have changed jobs. If your case is dismissed voluntarily after a Motion for Relief has been filed, you probably will not be eligible for any kind of Bankruptcy relief for six months. Therefore, it is very important to talk to Mr. Flexer's office if you know of any reason why the Trustee would not receive payment. Remember, neither the Trustee's office nor Mr. Flexer's office has any 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, and you should contact Mr. Flexer's office soon enough to ask the Judge to change the requirements of your plan if you feel that you cannot meet the obligations of your plan.
REQUEST FOR DISMISSAL BY YOU
Federal Bankruptcy law allows you to request that your Chapter 13 case be dismissed at any time. 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, you should understand that a dismissal will reactivate all unpaid or disputed debts, all interest, finance charges, and all late creditors who did not file their claims. In addition, you will be forced to deal with those creditors on their terms, not on yours or the Courts. The reason for dismissal of your plan must be in writing and sent to the Bankruptcy Court. Unpaid attorney fees are still due and owing to Mr. Flexer. Remember, if your case is dismissed voluntarily after a Motion for Relief has been filed, you probably will not be eligible for any kind of Bankruptcy relief for six months.
PERSONAL INJURY, WORKER'S COMPENSATION, & CHAPTER 13
If you are injured in an automobile accident or are injured on the job, you must contact our office immediately. The Bankruptcy Court will need to approve and authorize any type of Personal Injury or Workers' Compensation settlement in which you are involved. Failure to notify us as soon as an accident or injury occurs could have an effect on how much of your recovery you will be allowed to keep.
We handle Personal Injury and Workers' Compensation cases and can guide you through the potential maze of your injury claim in relation to your bankruptcy.
Also, if your car is damaged in a personal injury claim, you may want to ask the Court to allow you to use the insurance proceeds to purchase a substitute automobile. At any rate, we must be involved in the case as soon as possible to help protect your rights. If you fail to contact us and later you receive a settlement and it is not Court approved, you may have to forfeit or turn over those proceeds to the bankruptcy estate. The easy rule of thumb to follow is:
Call us First
WHEN YOU ARE THROUGH
After you have successfully completed your plan (after the Trustee has received enough money to pay your creditors what you promised to pay them), you will receive the discharge of your debts. You will generally not owe any debts, other than child support, student loans, alimony, mortgage payments, and taxes. If you are not sure which of your debts will be discharged, you should discuss that with your attorney when you meet with him/her. After you have met with your attorney (or the Judge) to discuss the discharge, you might receive a small refund check from the Trustee which is the amount of your last few payments that were not needed to pay your creditors. When you have seen the video at the meeting of creditors, you are not required to meet with your attorney after completing the case.
CONTACT BY CREDITORS AFTER COMPLETION OF CHAPTER 13
When a creditor has had his claim paid by Chapter 13, whether partially or in full, they sometimes send 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 and you received a discharge would overrule any document a creditor could produce. Should you receive any request for additional money after your plan is completed, do not pay without first consulting Mr. Flexer's office.
CREDIT RATING
Your credit rating during and after completion of your Chapter 13 will be, as it is now and was in the past, the personal opinion of any creditor grantor who looks at your credit record. A credit rating is not an A-B-C or 1-2-3, it is a record of all of your past credit purchases and subsequent payment records. This record is made available to a creditor and he makes up his own mind as to whether or not he wishes to grant you credit. Judgments, collections, attachments, straight bankruptcies and Chapter 13 are indications, in one degree or another, of credit problems. After many years and hundreds of paid in full Chapter 13 cases in this area, we find a good many knowledgeable creditors looking upon those who have paid debts in full under a Chapter 13 plan as having fulfilled their obligation to the creditors. Any credit record that has been blemished by payment problems, must be gradually rebuilt. Remember though, that Chapter 13 is a good place to begin rebuilding your credit rating. A Chapter 13 stays on your credit report for ten (10) years from the date it is filed, whether you finish your plan or it is dismissed.
CREDIT REPAIR
Credit repair is not within the scope of the service that we provide you in representation in your bankruptcy. If you feel that you have incorrect or false or misleading information on your credit report, you have rights under the Federal Fair Credit and Reporting Act. While the Law Offices of James A. Flexer does handle credit repair matters, these are not covered as part of your bankruptcy representation. This is one reason it is extremely important for you to keep every document which you ever receive from either Mr. Flexer's office, the Bankruptcy Court, or the Chapter 13 trustee's office. This can aid you if you wish to undertake credit repair on your own. If you would like to hire our office to attempt to correct false or misleading or incorrect information on your credit report, it will be necessary for you to make an appointment and enter into a separate fee agreement regarding such services.
LEASES
Under 11 U.S.C. § 365 of the bankruptcy code, Chapter 13 debtors are allowed to assume or reject a lease within 60 days of the filing of the petition. The terms of the lease cannot be changed as it relates to the regular monthly or weekly payment on the lease. That must stay the same. Arrears, or the amount you are behind on the lease can be cured "promptly". Most of the legal decisions dealing with what the word "promptly' means hold that lease arrears must be cured within the remaining term of the lease. Some cases have even said that lease arrearages must be cured in as little as two or three months. If you do reject the lease instead of assuming the lease, the creditor is entitled to a claim for the period of time that you continued to retain the property in question, but their remedy is to file a claim in your Chapter 13. A debtor cannot force the holder of a lease, like a landlord, to renew the lease once it is over unless there is a renewal option.
MODIFICATIONS BY A CREDITOR OR THE CHAPTER 13 TRUSTEE
If you are paying a low percentage to your unsecured creditors (normally less than 20%), the Chapter 13 Trustee will randomly request verification of your pay stub and your year to date gross and net income. If he believes you are able to pay more to your creditors, he or a creditor can ask the judge to order you to pay more. This would be requested by the Trustee or creditor with a motion to modify your plan. You can contest such a motion in some instances by showing an increase in necessary expenses, for example. As a result, many clients try to pay at least a 20% dividend to reduce the chance that the Trustee will randomly audit their case.
DEALING WITH YOUR ATTORNEY
Under the rules of the Bankruptcy Court and your agreement with Mr. Flexer, he will continue to appear and represent you in your Bankruptcy for as long as your case is active or until the Judge permits him to withdraw from your case. If you ever have a question concerning your case, a creditor, your rights, or your options, you should make it a rule to ask our office FIRST. In most cases, Mr. Flexer will be paid through your Chapter 13 plan. Be sure that you and he have discussed fully whether additional legal services during your plan will cost you more money or whether the initial fee will cover all legal services. All legal fees must be approved by the Bankruptcy Judge.
It may be necessary to contact Mr. Flexer's office during your Chapter 13. Mr. Flexer's employees are each assigned different tasks. We handle thousands of Chapter 13 cases in addition to yours. Sometimes it takes several days, and occasionally several weeks, to get an answer from the Trustee, a creditor or the Court. Many motions by debtors have a twenty (20) to thirty (30) day waiting period, in order to give a creditor or the Trustee an opportunity to review and, if appropriate, to object to your request. Creditors have such rights under the Bankruptcy Code and Rules.
Mr. Flexer's office handles hundreds of telephone calls every day. Do not get frustrated if it takes time to resolve your problem. It took time to get into the debt problems you have and it may take time to resolve those problems. Mr. Flexer and his office staff work very hard to handle your case. It makes their job much easier when clients are courteous and patient. When emergencies occasionally do arise, he and his staff will do everything possible to help you. Remember, we are on your side, however, we cannot solve every problem.
Also, if Mr. Flexer or another employee is not instantly available, please leave a detailed message so that we can start working on your problems as quickly as possible. Often we must obtain information from the Trustee, a creditor or the Court to answer your question. The more information we have, the quicker we can solve your problem or answer your question. If these basis rules are followed, your Chapter 13 will be a more pleasant experience for you.
FINAL WORD
Complying with a Chapter 13 plan is not easy. You may have to make a real sacrifice to meet the obligations which you have specified in your plan and still live within your Chapter 13 budget. Thousands of families have successfully completed their Chapter 13 plans and know that they have resolved their debt problems without filing straight bankruptcy and have paid most, if not all, of their obligations to their creditors. Chapter 13 will only work for you if you work very hard at meeting your obligations under your plan.
