Bankruptcy Code Section 1321 requires that any debtor in a Chapter 13 Bankruptcy must file a plan. A Chapter 13 plan describes how the debtor intends to pay his various creditors in his Chapter 13 Bankruptcy.
Section 1322 of the Bankruptcy Code defines what the Chapter 13 Bankruptcy plan must include. Section 1322(a) states that priority creditors must receive full payment through the Chapter 13 plan, unless the holder of the particular claim agrees to different treatment. Section 1322(a)(2) provides that similar claims must receive similar treatment under the plan. This is referred to as the principle of nondiscrimination, meaning all creditors that are the same, must receive the same treatment in the Chapter 13 Bankruptcy plan. Section 1322(a)(3) provides that a Chapter 13 plan may pay less than the full balance of a priority claim if the plan provides that all of the debtor’s projected disposable income for a five year period is applied to the plan.
A debtor may have many different categories or classifications of debts. A tax debt may be classified as a priority debt, a secured debt, or an unsecured debt, depending on various criteria. A debtor may have an automobile loan, which is usually both a secured and unsecured debt. Credit cards, medical bills, and signature loans are usually unsecured debts. Obligations owed to various governmental entities, criminal fines, child support and alimony, and other debts, all are different categories of debt. These debts all must be treated differently through the Chapter 13 Bankruptcy plan. Some of these debts must be paid in full, some at reduced principal, and some debts are paid at reduced interest or no interest, depending on their classification.
Bankruptcy Code Section 1330 states that within 180 days after the entry of the Order of Confirmation, a Party In Interest may request that the Bankruptcy Court Revoke the Confirmation Order, if such Order was obtained by Fraud.
Bankruptcy Code Section 1329 states that at any time after Confirmation of the Chapter 13 Plan but before completion of payments under the Chapter 13 Plan, the Debtor, the Trustee, or an Unsecured Creditor, may Modify the Chapter 13 Plan to:
- Increase or Reduce the Payments on Claims to a particular class of creditors provided for in the Chapter 13 Plan;
- Extend or Reduce the time of such Payments under the Chapter 13 Bankruptcy;
- Reduce the amount that the Debtor in the Chapter 13 Bankruptcy pays through the Plan in order that the Debtor may purchase Health Insurance for himself or his Dependants.
Bankruptcy Code Section 1328(f) a Debtor may receive a Discharge in a Chapter 13 Bankruptcy provided the Debtor DID NOT receive a Discharge in a Chapter 7 Bankruptcy, a Chapter 11 Bankruptcy or a Chapter 12 Bankruptcy during the Four Year Period preceding the filing of the Chapter 13 Bankruptcy. If a Debtor seeks a Discharge in a Chapter 13 Bankruptcy, he could not have received a Discharge in a prior Chapter 13 Bankruptcy within two years of filing the second Chapter 13 Bankruptcy.
Bankruptcy Code Section 1328(b) describes the necessary conditions for a Debtor in a Chapter 13 Bankruptcy to receive a Hardship Discharge. A Debtor in a Chapter 13 Bankruptcy may receive a Hardship Discharge only if:
The Chapter 13 Debtor is unable to complete the payments due under the Chapter 13 because of circumstances which the Debtor cannot justly be held accountable;
The value of the Property distributed under the Chapter 13 Bankruptcy Plan is not less than the amount that would have been paid if the Bankruptcy Estate had been liquidated under Chapter 7;
Modification of the Chapter 13 Bankruptcy Plan under Section 1329 of the Bankruptcy Code would not be practical
Bankruptcy Code Section 1327 states that the Confirmation of the Chapter 13 Bankruptcy Plan binds both the Debtor and Creditor, whether or not such Creditor Accepted, Rejected or Objected to, the Chapter 13 Bankruptcy Plan. Section 1327(b) of the Bankruptcy Code also provides that the Confirmation of the Chapter 13 Bankruptcy Plan Vests all Property of the Bankruptcy Estate, to the Debtor, unless the Chapter 13 Plan provides otherwise, or the Order Confirming the Chapter 13 Bankruptcy Plan, provides otherwise. Furthermore, unless provided otherwise in the Order Confirming the Chapter 13 Plan or the Order Confirming the Plan, such Vested Property is free and clear of any interest or claim by any Creditor provided for in the Chapter 13 Bankruptcy Plan.
Bankruptcy Code Section 1326 provides that unless otherwise ordered by the Bankruptcy Court, the first payment due to the Chapter 13 Trustee is no later than 30 days after the Bankruptcy was filed.
Bankruptcy Code Section 1325 states the Requirements for a Chapter 13 Bankruptcy, to be Confirmed by the Bankruptcy Court. Among the requirements necessary for the Chapter 13 Bankruptcy Plan to be Confirmed is that the Plan must have been proposed in Good Faith. Good Faith means that the Chapter 13 Plan was not proposed for any illegal purpose, or fraud, or simply to evade Creditors. The Debtor in the Bankruptcy is making a Good Faith effort to repay his Debts, but in a reorganized manner, and often at less than the full amount owed some of the Creditors. Second, the Chapter 13 Plan must meet the Liquidation Test. The Liquidation Test, in a Chapter 13 Bankruptcy, means that the Value of the Property to be distributed under the Chapter 13 Plan must be not less than the amount that would be available to distribution to the Creditors, if the Debtor filed a Chapter 7 Bankruptcy, and such properties were liquidated, pursuant to the Chapter 7 Bankruptcy. For a Chapter 13 Bankruptcy to be Confirmed, the Debtor in the Bankruptcy must pay all amounts due under a Domestic Support obligation. The Debtor also must have filed all Local, State and Federal Tax Returns, as required under Section 1308 of the Bankruptcy Code.
Bankruptcy Code Section 1324 is titled, Confirmation Hearing. If a Chapter 13 Plan is Confirmed by the Bankruptcy Judge, then the Plan is approved by the Judge. Creditors can generally not object to a Confirmed Chapter 13 Bankruptcy Plan. The Bankruptcy Hearing on Confirmation of the Chapter 13 Plan may be held between 20 days to 45 days, after the 341 Meeting of Creditors, unless the Bankruptcy Judge determines that it is in the best interest of the Bankruptcy Estate and the Creditors, to hold the Confirmation Hearing at an earlier date. Any Creditor in the Chapter 13 Bankruptcy, subject to some limitations, has the opportunity to Object to the Confirmation of the Chapter 13 Bankruptcy Plan.
Bankruptcy Code Section 1323 provides that the Bankruptcy Debtor may Modify the Chapter 13 Bankruptcy Plan before Confirmation, but cannot Modify the Chapter 13 Plan in such a manner as to violate the requirements of the Plan pursuant to Section 1322 of the Bankruptcy Code.
Bankruptcy Code Section 1322 states what the Chapter 13 Bankruptcy Plan must contain. This is an important Section of the Bankruptcy Code because it more than merely describes what is necessary for a Chapter 13 Plan, but because the contents of the Chapter 13 Bankruptcy Plan describes some very important concepts in Bankruptcy Law. The Chapter 13 Bankruptcy Plan must:
Provide that the Debtor in the Chapter 13 Bankruptcy submit all or such portion of his future earnings or income as is necessary for the execution of the Chapter 13 Plan;
Provide that Chapter 13 Bankruptcy Debtor pay the Full Payment of any Priority Debts in the Bankruptcy, unless the Creditor agrees to a lesser Amount;
Provide that the Debtor in the Chapter 13 Bankruptcy pay less than the Full Amount of any Priority Claims only if the Bankruptcy Plan pays all of his Disposable Income over a Five Year Period.
Bankruptcy Code Section 1322 also states that the Chapter 13 Bankruptcy Plan MAY:
Designate a Class or Classes of Unsecured Creditors but cannot Discriminate Unfairly against any Class;
Provide for the curing of Defaults;
Provide for the the Vesting of Property of the Bankruptcy Estate, on Confirmation of the Chapter 13 Bankruptcy Plan, or at a later time
Section 1322(b) of the Bankruptcy Code provides other elements that the Chapter 13 Bankruptcy Plan may contain.
Section 1321 of the Bankruptcy Code states that the Debtor shall file a plan. The Debtor in the Chapter 13 Bankruptcy has the exclusive right to file a repayment plan, within the time which the Bankruptcy Rules permit. Creditors may file a plan under any circumstances.
Section 1308 of the Bankruptcy Code states that when a Debtor files Chapter 13 Bankruptcy, the Tax Returns for the four years before the filing of the Bankruptcy, must be filed no later than one day before the first scheduled 341 or Creditors Hearing. The Bankruptcy Trustee in the Chapter 13 Bankruptcy may hold open the 341 Meeting to give the Debtor in Bankruptcy, additional time to file the required Tax Returns, the additional time can not exceed the later of 120 days after the date of the first 341 Meeting in the Bankruptcy. For any Tax Return that is not past due, the Debtor may receive an extension to file that Tax Return, the later of:
- 120 days after the date of the first 341 Meeting in the Bankruptcy
- The date on which the Tax Return is due under the last automatic extension for filing that Tax Return.
Please note the Extension that may be given by the Chapter 13 Bankruptcy Trustee. May does not equal Will. The Bankruptcy Trustee in the Chapter 13 Bankruptcy may not grant any extension of time for the Debtor to file the Tax Return.
Section 1307 of the Bankruptcy Code states that the Debtor in a Chapter 13 Bankruptcy can Convert to a Chapter 7 Bankruptcy, at any time, and any Waiver of such right, is unenforceable. The United States Trustee or a Party in Interest, under Section 1307 of the Bankruptcy Code, may seek to have the Debtor’s Chapter 13 Bankruptcy converted to a Chapter 7 Bankruptcy, if any number of eleven different events occur. These include Unreasonably Delay by the Debtor in the Chapter 13 Bankruptcy that is Prejudicial to Creditors, non payment of certain fees that are required pursuant to Chapter 13 Bankruptcy, failure to file a Chapter 13 Plan, failure to make timely payments, Material Default by the Debtor in the Bankruptcy, and failure to pay Domestic Support Obligtations, that become due after the filing of the Bankruptcy.
Bankruptcy Code Section 1306, Property of the Bankruptcy Estate in a Chapter 13 Bankruptcy includes all Property that the Debtor in Bankruptcy acquires after the filing of the Bankruptcy but before the case is Closed, Dismissed, or Converted to a case under Chapter 7 Bankruptcy, Chapter 11 Bankruptcy, or Chapter 12 Bankruptcy. In a Chapter 13 Bankruptcy, Property of the Bankruptcy Estate also includes all earnings from services provided by the Debtor in Bankruptcy, before the Chapter 13 Bankruptcy is either Closed, Dismissed or Converted to a case under Chapter 7 Bankruptcy, Chapter 11 Bankruptcy, or Chapter 12 Bankruptcy.
Bankruptcy Code Section 1305 permits the Allowance of a Proof of Claim by a governmental unit to whom taxes become payable while the Chapter 13 Bankruptcy Case is pending and for a Debt from Services or Property that are provided that necessary for the Bankruptcy Debtor’s performance under the Chapter 13 Plan.
Under Section 1304 of the Bankruptcy Code, a Debtor Engaged in Business is defined as a debtor that is self-employed and incurs trade credit in the production of income from such employment is engaged in business. In a Chapter 13 Bankruptcy, the Debtor Engaged in Business may operate his business, with the same powers and limitations that the Bankruptcy Trustee possesses, under Sections 363(c) and 364 of the Bankruptcy Code. Essentially, the Debtor may operate his business, as before the filing of the Chapter 13 Bankruptcy, must subject to Section 704(8) of the Bankruptcy Code, the Debtor must be able to produce periodic records and summaries of the operations of such business including a statement of treceips and disbursements and other such information that the United States Trusteee or the Bankruptcy Code may request.
Section 1303 of the Bankruptcy Code describes the Rights and Powers of the Debtor in Chapter 13 Bankruptcy. Bankruptcy Code Section 1303 states: Subject to any limitations on a Bankruptcy Trustee under this Chapter, the Debtor in Bankruptcy shall have, exclusive of the Bankruptcy Trustee, the Rights and Powers of a Bankruptcy Trustee under Sections 363(b),(d),(e),(f), and (l) of the Bankruptcy Code. Under the applicable Sections of 363 of the Bankruptcy Code, the Bankruptcy Trustee may Use, Sell, or Lease Property of the Bankruptcy Estate. These are Powers that the Debtor in Bankruptcy also possesses, subject to some limitations, by virtue of Section 1303 of the Bankruptcy Code. This Bankruptcy Code Section is misleading because the Powers and Rights of the Debtor in Bankruptcy extend beyond the framework of this Bankruptcy Code Section. The Powers and Rights of the Debtor in Bankruptcy come from the Bankruptcy Code, as it is established. For example, the Debtor has the Power, by virtue of filing a Bankruptcy, in essence, to stop a Foreclosure on his home. This is referred to as the Automatic Stay in Bankruptcy, and the Bankruptcy Debtor activates that protection, with some limitations, by filing the Bankruptcy.
Section 1302 of the Bankruptcy Code states the Duties of the Chapter 13 Bankruptcy Trustee in Bankruptcy Proceedings. The Chapter 13 Bankruptcy Trustee is accountable for all property received. Furthermore, the Chapter 13 Bankruptcy Trustee must ensure that the Bankruptcy Debtor performs his stated Intentions in the Bankruptcy Plan, investigate the financial affairs of the Debtor in the Bankruptcy, and if a purpose would be served, examine the Proof of Claims, and Object to any Claims that are improper. The Chapter 13 Bankruptcy Trustee must also oppose the Discharge of the Debtor in the Bankruptcy, when warranted. Section 1302 also mandates that the Bankruptcy Trustee must make a Final Report and file a Final Account of the Administration of the Bankruptcy Estate with the Bankruptcy Court. Bankruptcy Code Section 1302 also has requirements as to his presence at such Hearings as the Confirmation of the Chapter 13 Case, the Value of Property subject to a Lien, and at Bankruptcy Hearings regarding the Modification of the Chapter 13 Bankruptcy Plan, after Confirmation. The Chapter 13 Bankruptcy Trustee has other Duties, but these are the main duties of the Trustee in a Chapter 13 Bankruptcy.
Section 1301 of the Bankruptcy Code, a Creditor cannot take any action against a CoDebtor of the Debtor, after the Debtor files Bankruptcy, including the commencement or continuation of any civil action, to collect all or part of a consumer debt of the Debtor. The Exceptions under the Bankruptcy Code where a Creditor can make collection efforts against the CoDebtor is also contained in Section 1301(a),(b), and (c) of the Bankruptcy Code. The CoDebtor is not protected by the filing of the Chapter 13 Bankruptcy by the Debtor when:
The Codebtor became liable on or secured such Debt in the ordinary course of the Codebtor’s business;
The Bankruptcy Case is Closed, Dismissed, or Converted to a Case under Chapter 7 Bankruptcy or Chapter 11 Bankruptcy;
A Creditor can present a negotiable instrument and give Notice of dishonor of such instrument;
The Bankruptcy Court grants Relief from the Automatic Stay in the Bankruptcy, provided:
The Codebtor received Consideration for the Claim held by the Creditor;
The Chapter 13 Bankruptcy Plan does not provide for the payment of such Claim;
The Creditor’s interest would be Irreparably Harmed by the continuation of the Automatic Stay in the Chapter 13 Bankruptcy
It is much easier to Discharge Tax Debts in a Chapter 13 Bankruptcy than a Chapter 7 Bankruptcy. In a Chapter 13 Bankruptcy, the 2 Year Rule does not apply. The Tax Debt must only qualify under the 3 Year Rule and the 240 Day Rule. Also the Tax Evasion prohibitions do not apply to Chapter 13 Bankruptcy as opposed to a Chapter 7 Bankruptcy. However, although Tax Evasion still qualifies a Chapter 13 Debtor for Discharge of his Tax obligation, the Internal Revenue Service can still, if it chooses, criminally prosecute the Debtor, provided the 6 Year Statute Of Limitation for Tax Fraud has not passed. In matters of Employment Taxes, the Employer portion in a Chapter 13 Bankruptcy is Dischargeable, provided the 3 Year Rule is satisfied. The Taxpayer or Debtors is not required to file the Tax Return in order to receive a Discharge.
]A Chapter 13 Bankruptcy is also referred to as a Debt Reorganization or Debt Consolidation. The Chapter 13 Bankruptcy allows a debtor to pay his obligations over a thirty six (36) to sixty (60) month plan. Only an individual debtor may file a Chapter 13 Bankruptcy. A corporation may not file Chapter 13, but may file a Chapter 7 Bankruptcy or a Chapter 11 Reorganization. A Chapter 13 Bankruptcy is often used when a debtor is behind on his mortgage payments, is seeking to retain his home, and stop Foreclosure proceedings. The Chapter 13 Bankruptcy will stop the Foreclosure and allow the debtor to pay the arrearages due on the mortgage over a sixty month period. If the debtor has a second mortgage on his Homestead, the Chapter 13 Bankruptcy will sometimes permit him to eliminate the second mortgage. This process is called lien stripping. A Chapter 13 Bankruptcy will allow a debtor to value his automobile and other personal property, where he only has to pay the true value of the property over sixty months. In order to value an automobile, the debtor must own the automobile for 910 days or 2.4 years. If the debtor owned the automobile and subsequently took a loan against it, the 910 rule does not apply. This process will usually save the debtor thousands of dollars and dramatically reduce his automobile payments. Even if the debtor cannot value the automobile, he may be able to “refinance” the automobile at reduced interest and reduced monthly payment, through the Chapter 13 Bankruptcy. The debtor can also value other personal property but must own the property for at least one year. If a debtor has tax obligations, he can usually pay his taxes through a Chapter 13 Bankruptcy at little or no interest. All penalties are stopped. Sometimes, taxes can be eliminated completely through a Chapter 13 Bankruptcy (or a Chapter 7 Bankruptcy). A Chapter 13 Bankruptcy is one of the few arenas wherein a debtor is on an equal level with the Internal Revenue Service. For higher income debtors who exceed the limits of the Means Test, the Chapter 13 Bankruptcy may be a viable alternative. The payment for most debtors, irrespective of their income, is usually dramatically less in a Chapter 13 Bankruptcy than if the debtor made such payments outside of the Chapter 13.
Bankruptcy Code Section 1330 addresses the revocation of an order of confirmation. Section 1330(a) states that on the request of a party in interest at any time within 180 days after the Confirmation of a Chapter 13 Bankruptcy, and after notice and hearing, the Bankruptcy Court can revoke the Confirmation Order if such order was obtained by fraud. The Chapter 13 Bankruptcy will be then Dismissed, unless the debtor proposes and the Bankruptcy Judge confirms a modified Chapter 13 Bankruptcy plan.
Section 1329 of the Bankruptcy Code states that at any time after confirmation of the plan, but before the completion of payments under the plan, the Chapter 13 Bankruptcy plan may be modified. The debtor, the Chapter 13 Bankruptcy Trustee, or an unsecured creditor, may all seek modification of the Chapter 13 Bankruptcy plan. Modification may involve increasing or decreasing the payment in the Chapter 13 Bankruptcy plan, or extending or reducing the time for such payments. In addition, Section 1328(a)(4) of the Bankruptcy Code states that the debtor may reduce his payments under the Chapter 13 Bankruptcy in order that he may purchase health insurance. The payment under the Chapter 13 plan may be reduced by the actual cost of the health insurance. In most cases the Chapter 13 Bankruptcy Trustee in Tampa, Florida, will not seek to increase the debtor’s payment in a Chapter 13 Bankruptcy plan. In rare exceptions, the Chapter 13 Bankruptcy Trustee will examine the cases of debtors who have commission income, such as an insurance salesperson or a realtor, because such income tends to fluctuate widely. The Bankruptcy Trustee will also sometimes examine the cases of debtors who had relatively low income at the time of the Bankruptcy filing, but have the potential to make much more. If such a debtor experiences a large increase in his income after the Chapter 13 Bankruptcy is confirmed, the Bankruptcy Trustee can seek to increase the debtor’s monthly payment. In such cases, our office will contest the increase in payment. We can present evidence to the Bankruptcy Judge that the debtor’s expenses have also increased, and therefore the payment should remain at the original amount determined at Confirmation. Very few of our clients experience an increase in their Chapter 13 Bankruptcy payment after Confirmation. Sometimes, a debtor with high income and a high Chapter 13 Bankruptcy payment, will experience a decrease in income. In such cases, your Bankruptcy Attorney can seek a decrease in the monthly obligation to the Chapter 13 Bankruptcy Trustee.
A Discharge in a Chapter 13 Bankruptcy means that the debtor has paid all of his obligations and no longer has any obligations to the creditors provided for in the Chapter 13 Bankruptcy plan. Bankruptcy Code Section 1328 describes Discharge in a Chapter 13 Bankruptcy. In some cases, a debtor who has not completed his Chapter 13 plan obligations, may still receive a Discharge. Section 1328(b) of the Bankruptcy Code defines what is referred to as a Hardship Discharge. The Bankruptcy Court may grant a Discharge to a debtor that has not completed his payments under the Chapter 13 Bankruptcy plan if the debtor’s failure to complete such payments is due to circumstances for which he should not justly be held accountable, the value of the debtor’s property is such that if such debtor filed a Chapter 7 Bankruptcy, no distribution would be available to the creditors, and modification of the plan is not practical. A Discharge in a Chapter 13 Bankruptcy can be denied for many reasons. Bankruptcy Code Section 1328(f) enumerates some of the many reasons a Discharge can be denied. A Discharge can also be revoked under 1328(e) if a Creditor, the Bankruptcy Trustee, or other party in interest, brings an action to revoke the Discharge. The action must be brought within one year from the date the Discharge was granted, the Discharge must have been obtained by the debtor through fraud, and the objecting party must not have known of such fraud until after the Discharge was granted.
Section 1327 of the Bankruptcy Code states that the provisions of a confirmed plan bind the debtor and the creditor, whether or not the claim of such creditor is provided for in the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan. Section 1327(b) of the Bankruptcy Code states that, unless provided otherwise in the plan or the order confirming the plan, the confirmation of a Chapter 13 plan vests all of the property of the estate in the debtor. After the Bankruptcy plan is confirmed, the creditors may not alter the plan. The creditors are bound by the terms of the plan, as presented by the Bankruptcy Attorney, and as ordered by the Bankruptcy Judge.
Confirmation refers to the judicial approval of a Chapter 11, Chapter 12, or a Chapter 13 Bankruptcy plan. Bankruptcy Code Section 1325 defines what is required for the Bankruptcy Judge to Confirm a Chapter 13 Bankruptcy plan. The Chapter 13 Bankruptcy plan must be proposed in good faith, all required fees must be paid through the plan, all creditors must be provided for in the plan depending on their classification as either a priority, secured or unsecured creditor, all payments to the Chapter 13 Bankruptcy Trustee must be made timely, and all disposable income must be contributed to the plan. The Bankruptcy Code has many other requirements for the Confirmation of a Chapter 13 Bankruptcy plan, but these are among the more prominent elements.
Bankruptcy Code Section 11 USC 1301 governs the Stay of actions against codebtors. Section 1301(a) states, that if a debtor files Chapter 13 Bankruptcy, a creditor may not attempt to collect from a codebtor or co-obligor, unless the debt is incurred in the ordinary course of the codebtor’s business or the Bankruptcy case is closed, dismissed, or converted to a case under Chapter 7. If a debtor files Chapter 13 Bankruptcy, the co-debtor receives similar protection from his creditors, through the enactment of the Automatic Stay. The Automatic Stay prevents creditors or stays creditors, from continuing collection efforts against the protected parties. A creditor can take action to eliminate the Automatic Stay protection for the co-debtor if the co-debtor received the benefit of the debt that was incurred, or the Chapter 13 plan does propose to pay the claim held by the creditor, or the creditor’s interest would be irreparably harmed by the continuation of the Automatic Stay. Generally, if a debtor files a Chapter 13 Bankruptcy, and he is interested in protecting the co-debtor from creditor actions, the debtor will offer to pay 100% of the claim to the creditor through the Chapter 13 Bankruptcy plan. This prevents the creditor from eliminating the Automatic Stay protection. Usually, the 100% paid to the creditor is paid without interest or penalties. If the Chapter 13 Bankruptcy plan does not address properly the treatment of a co-debtor account, Section 1301(d) permits the creditor to bring before the Bankruptcy Judge, a request for Relief from the Automatic Stay. The Automatic Stay protection will end twenty (20) days after the creditor makes such request, unless the debtor files and serves upon the creditor, a written objection to the taking of such action.
The first payment to the Chapter 13 Bankruptcy Trustee is due approximately thirty (30) days after the Chapter 13 Bankruptcy is filed. The Bankruptcy Trustee generally grants a grace period of up to thirty (30) days after the payment is due. However, it is best not to rely on the grace period if possible, so as not put oneself in a position of constant delinquency with the Chapter 13 Bankruptcy Trustee.
After a debtor files a Chapter 13 Bankruptcy, he will receive an Order from the Bankruptcy Judge directing the debtor to make payment to the Chapter 13 Bankruptcy Trustee. Currently, there are only two Chapter 13 Trustees in the Tampa Bankruptcy Court: Terry E Smith and John Waage. The debtor can mail his payment to the Office of the Chapter 13 Bankruptcy Trustee. The Trustee will accept money orders, cashier checks, and certified checks. The money order can be procured from numerous locations such as AMSCOT or 7-11. The Trustee will not accept personal checks or cash. The Chapter 13 Bankruptcy Trustee also offers an automatic debit payment program, wherein the Trustee will automatically debit the debtor’s bank account. In addition, the debtor can elect to make one payment once per month or make two smaller payments bi-weekly.
Section 1324 and Section 1325 of the Bankruptcy Code provides for the establishment of the Confirmation Hearing in a Chapter 13 Bankruptcy. Section 1324 provides that the Confirmation Hearing may not be held not earlier than twenty (20) days and not later than forty five (45) days after the Meeting of Creditors under Section 341(a) unless the Bankruptcy Judge decides it is in the best interest of the creditors and Estate to hold the Confirmation Hearing earlier. When a debtor files a Chapter 13 Bankruptcy, there are many things that must be accomplished in order for the case to be worthy of approval by the Bankruptcy Judge. Creditors will file claims in the Bankruptcy as to amounts owed. A mortgage creditor, for example, may file a claim asking for unreasonable amount of foreclosure fees or mortgage arrears. The Bankruptcy Attorney must then file an Objection to such claims. If the Bankruptcy Attorney is seeking to eliminate a second mortgage on a Homestead, procedures must be followed. If the Bankruptcy Attorney is attempting to value an automobile, wherein the debtor only has to pay the true value of the automobile through the Chapter 13 Bankruptcy, other work must be completed. Many things have to completed before the Chapter 13 Bankruptcy is ready for the review of the Bankruptcy Judge. Once all work is done in the Chapter 13 Bankruptcy, then the Bankruptcy Attorney will set a Confirmation Hearing in front of the Bankruptcy Judge. The Confirmation Hearing is where the Bankruptcy Judge reviews all the matters completed in the Bankruptcy, the debtor’s history of payments, and any Objections raised by creditors or the Chapter 13 Bankruptcy Trustee. If the Bankruptcy Judge is satisfied that all issues have been resolved, she will Confirm or approve the Chapter 13 Bankruptcy plan.
If your Chapter 13 Bankruptcy has been Dismissed by the Bankruptcy Judge for failure to timely make payments to the Chapter 13 Bankruptcy Trustee, we can often take measures to Reinstate or reactivate the Chapter 13. In order for the Reinstatement to be granted by the Bankruptcy Judge, the debtor must be able to immediately become current in his payments to the Chapter 13 Bankruptcy Trustee. Be aware that the Bankruptcy protections against foreclosure, repossession, or other creditor actions, will not be activated until the Bankruptcy Court enters an order reinstating your case.
A Dismissal in a Bankruptcy is when the Bankruptcy Court ends or dismisses a debtor’s Bankruptcy Case. A Dismissal usually occurs in a Chapter 13 Bankruptcy when the debtor fails to make timely payment to the Chapter 13 Trustee. If your Chapter 13 Bankruptcy has been Dismissed, you are no longer under the protection of the Bankruptcy Laws. The Automatic Stay, which prevents creditors from making collection efforts against you, is no longer in effect. If your Bankruptcy case is Dismissed, it is important that you immediately confer with your Bankruptcy Attorney. In some cases, provided there is good cause for the delinquency in payments, we can Reinstate or reactivate your Chapter 13 Bankruptcy. In other cases, we can re-file the Chapter 13 Bankruptcy in order to activate the Automatic Stay and the protections provided by the Bankruptcy Code.
If a debtor misses a payment in the Chapter 13 Bankruptcy, your Bankruptcy Attorney can usually negotiate with the Chapter 13 Trustee to arrange for the debtor to get caught up with the payments. However, once a debtor falls behind in his payments, if he ever is tardy again, the Chapter 13 Bankruptcy Trustee can automatically Dismiss the debtor’s Chapter 13 case. This is referred to as the “drop dead” provision. If a debtor feels he is not going to be able to make an upcoming payment, it is recommended that he contact our office. In some cases, we can arrange an Abatement, wherein the Bankruptcy Judge will give the debtor a month or series of months in which he does not have to make payments to the Trustee. An Abatement prevents the debtor from falling behind on his payments to the Chapter 13 Trustee and gives the debtor time to remedy whatever situation that is temporarily preventing him from making his payment to the Chapter 13 Trustee.
If you file a Chapter 13 Bankruptcy, it is best that you file any required tax returns before you file the Bankruptcy. Upon filing the Chapter 13 Bankruptcy, you will receive an “Order Establishing Duties of Trustee and Debtor” stating that you must file any delinquent tax returns before the Confirmation Hearing or your case will be dismissed. The Confirmation Hearing can be as soon as 20-44 days after the 341 Hearing (which is usually 30-45 days after your Bankruptcy is filed). It is generally to your advantage to pay any delinquent taxes through the Chapter 13 Bankruptcy because we can arrange for such taxes to be paid at either reduced or no interest, and can eliminate any future penalties. Some tax debts can actually be eliminated in a Chapter 7 or Chapter 13 Bankruptcy.