THIS INFORMATION IS NOT INTENDED TO PROVIDE LEGAL ADVICE
What is Chapter 13?
Chapter 13 is a repayment style bankruptcy for individuals only. It allows a debtor to obtain relief from creditors, sometimes on a limited basis only, while providing a plan for repaying debt in a fair and equitable fashion. People who file Chapter 13 cases are commonly referred to as “debtors”. At this time, a Chapter 13 plan cannot exceed 60 months. Only an individual with regular income can file a Chapter 13 petition.
What are my Chapter 13 costs?
The Trustee’s costs for administering your case are paid from the funds you pay into your plan. The United Stated Code sets the maximum fee at 10% of the amount collected or paid into the plan. The percentage fee will vary during the life of your case, but will not be more than 10%. If you case is dismissed or converted to another Chapter of the Bankruptcy Code prior to confirmation, the Trustee will return funds on hand to you less trustee fees, court approved attorney fees, administrative and adequate protection payments or any other court ordered payments.
Am I required to be represented by an attorney?
Those who choose to represent themselves in a Chapter 13 bankruptcy have a less than 2% chance of success. While it is your decision, it is not wise. Neither the Trustee, nor her staff, will provide any legal advice. Representing yourself makes you fully responsible for knowing, understanding and applying the applicable law. We urge you to retain counsel. If you would like legal assistance, but are unable to afford an attorney, please click on the following link for more information on the pro bono and legal aid programs offered in this state:
http://www.njb.uscourts.gov/pro-bono-programs
How do I make plan payments?
What takes place at the 341(a) Meeting of Creditors?
The 341(a) Meeting of Creditors is a required hearing where the Trustee, or staff of the Trustee, questions a debtor under oath. The questions pertain to identity, income, expenses, assets and debt. In addition, a review of your plan, schedules and budget will be discussed. Creditors are permitted to appear and ask questions. The meeting will be recorded, and the recording will be kept by the Office of the U.S. Trustee. Required documents must be uploaded to the Standing Trustee at least one week prior to the hearing. Failure to provide the documentation and/or failure to appear will result in dismissal of your case.
What is a Motion to Vacate Stay?
A Motion to Vacate Stay is a form request by one of your creditors to remove the protection of the bankruptcy stay. If the motion is granted there is no further automatic stay in place to protect you as to that creditor or asset. Your creditor can now go back to state court or whatever venue to resume collection activity and actions against you and your property. Speak with your attorney as soon as you receive such a motion.
What takes place at the Confirmation Hearing?
At the Confirmation hearing, your Judge will determine if your plan should be approved or your case should be dismissed. The Trustee will recommend confirmation (approval) of your plan if the Trustee believes that the plan complies with the legal requirements for Chapter 13Cases. If the Trustee determines that the plan is deficient, your attorney will be informed of the deficiencies by letter or e-mail before the Hearing. Copies of any revised or amended documents must be received by the Trustee at least three (3) days prior to the Confirmation Hearing. Your attorney must appear at any Confirmation Hearing unless otherwise adjourned or resolved prior to the hearing. If you are proceeding without an attorney, you must be present.
What is a Business Case?
Debtors who are self-employed as a sole proprietorship, report income as independent contractors, or earn a salary from a partnership or corporation they have an ownership interest in, are considered to be business cases by the Trustee. As a result, there are additional reporting requirements placed upon these Debtors under the Bankruptcy Code. The debtor is required to submit to the Trustee the following:
Proof of current insurance
- business liability, workers compensation if there are employees or uninsured subcontractors, liquor liability if the business uses a liquor license, and automotive insurance for any business vehicles.
- proof of current license if the business is required to have one to operate. Examples include day care centers, physicians, pesticide applicants, etc.
- copy of the previous year's Federal tax return for the individual and business, as well as monthly business reports (profit and loss statements, copies of business bank account statements, copies of canceled checks) for the current year through confirmation. Monthly business report forms are available from the Trustee's web site. If a non-debtor spouse is self-employed, income verification for that spouse's business is required.
How are my creditors paid?
The money you pay to the Trustee is used to pay your creditors, your attorney’s fees, if any, and the Trustee’s fees. Creditors have 90 days from the first meeting of creditors to file a proof of claim with the U.S. Bankruptcy Court. Government agencies have 180 days from the first meeting of creditors to file a proof of claim. The Trustee can only pay those creditors who file a proof of claim with the U.S. Bankruptcy Court. Creditors fall into three basic categories: Priority (income taxes, past due child support, real estate taxes); Secured (mortgages, auto loans); and Unsecured (credit cards, medical expenses).Unless your plan specifically provides for a different order of distribution, the Trustee will pay the unpaid balance owed to your attorney first; then the priority creditors are paid in full, the secured creditors will then be paid in full, and finally, the unsecured creditors are paid. Payments to your creditors will begin after the Bankruptcy Court has confirmed your case unless otherwise ordered.
What happens if I forget to list a creditor in my petition?
Creditors not listed when you file your case may cause problems. There are two kinds of unlisted creditors; those you owed money when you first filed your plan and forgot to list (“pre-petition creditors”), and those creditors who have a bill that was incurred after you filed your plan (“post-petition creditors”).If either circumstance does occur, notify your attorney immediately so that they can evaluate the situation and file the appropriate paperwork with the U.S. Bankruptcy Court. Always remember, you signed the petition and schedules under oath!
What happens if I lose my job?
If there is any disruption in the normally scheduled payments required under your Chapter 13Plan (due to illness, layoff, job termination, etc.) please contact your attorney immediately. The Trustee’s Office conducts a monthly review of all cases to determine which are in default, and from this review, prepares a list of cases to dismiss for nonpayment. Any change to income, assets and/or employment must be timely disclosed through the filing of amended schedules.
Can I sell or refinance my property during the Bankruptcy?
You cannot dispose of any of your property, including land, without obtaining permission from the Court. If you sell any of your property for a profit, some of that profit may have to be applied to your Chapter 13 debts. If you dispose of your property without Court authorization, the transaction may be set aside and your plan could be dismissed. Please remember that any real estate broker you wish to utilize must also be approved by Order of the Court. If you have entered a Contract to Sell any of your property, you should immediately contact your attorney, so he or she can file an appropriate motion with the Court.
How do I read my Annual report?
For an explanation on how to read your Annual report, please
What happens when I complete my case?
When all of the creditors in your Chapter 13 plan have been paid, your case has been completed. Once all of the checks that have been sent out to your creditors have been cashed and clear with the bank, a Final Report will be created. However, it may take up to 4 months from the date your case is completed for all of the checks to be cashed and clear with the bank Occasionally, one of your creditors will not cash a check and we will have to cancel it. Once we cancel the check, we send the funds to the United States Bankruptcy Court Registry where the creditor will need to file a motion to claim them. Once the Court Registry deposits those funds, we will then issue the final report. A copy of the final report will be sent to you and a copy will be electronically filed with the Bankruptcy Court. The Bankruptcy Court will process the Final Report and within 3 to 5 business days, they will issue your discharge paperwork to you and your creditors, if applicable. You should confer with your attorney as to any additional documents or classes you must take in order to obtain your discharge. The Final Report explains to you how much you sent to our office for your case and how those funds were disbursed to your creditors, attorney and trustee. The Discharge Order is the document that lets you and your creditors know that the case has been approved as completed by the Bankruptcy Court.
How do I check my credit rating?
The Trusteeship has nothing to do with your credit rating. For questions as to how a bankruptcy filing impacts your credit, please discuss with your attorney. To check your credit report, you can visit any of these websites:
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