1. I understand I must make a payment each month to the Trustee. How do I do that?
You must make your payments to the Trustee as described in Paragraph 1 of your plan. In most cases you will pay a monthly payment. The amount of your payment may change, so be sure to check your Plan. Remember YOU have the obligation to make sure that payments are made. If plan payments are made by you directly to the Trustee, please note the following:
THE TRUSTEE'S OFFICE CANNOT ACCEPT CASH OR PERSONAL CHECKS, INCLUDING CHECKS FROM COMPANIES YOU OWN.
EFFECTIVE 8/1/04: Payments must be mailed to the address listed below.
The Trustee will only accept Money Orders and Cashiers Checks, which must
include: Debtor's name, Address, and Chapter 13 Case Number.
DO NOT MAIL CASH!!!
Please make all payments payable to: Kathleen A. Leavitt, Trustee
Mail to: P.O. Box 1453
Memphis, TN 38101-1453
It is up to you to make sure your payments are getting to the Trustee on time.
Other correspondence should be addressed to: Kathleen A. Leavitt, Chapter 13 Trustee
201 Las vegas Blvd South, Suite 200
Las Vegas, NV 89101
2. Who is this Trustee anyway?
All Chapter 13 cases have a Trustee. She is responsible for the overall administration of your case. In many cases in Southern Nevada, the Trustee is Kathleen A. Leavitt, and her address can be found in the answer to question #1. He has approximately 3,500 active files in addition to yours. The Trustee's duties are found in the Bankruptcy Code. The Trustee has a staff of professionals to help with these duties. They include, at a minimum, reviewing your bankruptcy petition to ensure that it is complete and accurate; determining your ability to make payments and whether your Chapter 13 plan will be successful as proposed; conducting the first meeting of creditors and appearing at other hearings in your case; monitoring the progress of your case; collecting your payments and paying creditors according to the Plan; recovering improper payments made before your filing; providing information about your case to those who are authorized and have a need to know; and most importantly, assisting you in the administration of your Plan.
REMEMBER: The Trustee cannot give you any legal advice. If you need legal advice, contact your attorney. If you are unsure whether or not your question is of a legal nature, call your attorney first.
3. Do I have to list all my creditors? For example, my parents loaned me some money before the bankruptcy. I didn't want to list them because I am embarrassed and don't want them to know this Chapter 13 is happening.
Unfortunately, you are required by law to list all of your liabilities (debts) and assets (your possessions) in your bankruptcy papers (and the petition you signed has you affirm under your oath, subject to penalty of perjury, that you have done so). Nobody can pick and choose who gets listed. If you forgot to list someone, that debt will probably not be discharged. However, it is not too late to add them. You can add creditors you forgot by amending your schedules. This requires a small fee to the bankruptcy court. If you forgot a creditor, be sure to inform your attorney at once.
REMEMBER: The Bankruptcy Code prohibits you from favoring one creditor over another. This means you cannot pay a creditor "on the side" unless it is specifically allowed under your plan. In some cases, your Plan may instruct you to pay secured creditors directly (car loans, mortgage payments). However, under no circumstances should you be paying back any creditor unless your Plan so states. If you have any questions about this, talk to your attorney before you make any payments.
4. Okay, I added my parents and a couple other creditors I had forgotten on my bankruptcy papers. But this collection agency that I listed keeps calling and threatens to garnish my wages. I thought this would all stop when I filed. What can I do?
The filing of your bankruptcy papers will automatically stop any collection efforts once the creditor is notified. Most creditors know this and will stop collection efforts immediately. It usually takes about 30 days for a creditor to get officially notified. Occasionally, some creditors do not get the word or may still try to muscle their way in for more money than they are allowed to receive. If you are contacted, first check to be sure that creditor has been listed on your bankruptcy papers. If they weren't listed, see question #3 above. If they were listed, go on...
REMEMBER: You do not have to discuss the matter with a creditor who contacts you. It is best to simply tell them you are in Chapter 13, give them your case number and attorney's name. Then politely tell them not to call you again. If they persist, tell them they are in violation of a court order and you want them to stop. Be sure to keep a record of all calls and forward it to your attorney for action.
5. What happens if I miss payments to the Trustee?
You must not miss any payments to the Trustee. When you file your Chapter 13, your creditors are prohibited from taking any action against you. In exchange for that protection, you must complete your obligation under the Plan. One of those obligations is making your payments to the Trustee on time. If you miss payments, the Trustee cannot pay your creditors as called for by your Plan and the Trustee is obligated to file papers with the Bankruptcy Court asking that your case be dismissed. If your case is dismissed, your creditors will be notified and may resume collection against you. If you have a major change in your circumstances, you should notify your attorney at once. Your attorney can re-evaluate your financial situation and, if appropriate, modify your Plan to reflect the changed circumstances. This process can take several weeks, so be sure to contact your attorney immediately if you foresee any problem making your payments.
6. My Plan says I must send any tax refunds to the Trustee, and the Order Confirming Plan says I must report to the Trustee if my actual or projected gross income goes up 10%...could you explain that?
TAX RETURNS: You must submit signed copies of your STATE and FEDERAL TAX RETURN to the Trustee every year whether you get a refund or not. DO NOT SEND ORIGINALS! Please send these copies to the Trustee immediately after you file the returns. The Trustee will check the returns to see if your gross income has increased and if you are entitled to receive a tax refund.
TAX REFUNDS: Your Chapter 13 Plan requires you to pay your net tax refunds each year to the Trustee (usually for the first 3 years). If you have a tax refund, the entire refund must be sent to the Trustee (just endorse the check over to Kathleen A. Leavitt, Trustee) unless, in that same year, you also owe state income taxes. For example, if you receive a $500 Federal tax refund and that same year you owed the State $300, you would only need to send the Trustee the net of $200 left over.
INCREASED INCOME: You are required to report to the Trustee if and when your gross income increases more than 10% from the amount originally reported on your Schedule I filed with your bankruptcy papers. If that happens, you should contact your attorney to review all of your income and expenses and file amended schedules to reflect the changes.
OTHER DISTRIBUTIONS: If you take a retirement fund distribution or have the right to receive any funds exceeding $2,500 during your plan you must inform the Trustee. Taking a retirement distribution during the plan can turn that exempt property into disposable income which may have to be paid to your creditors, so be sure to talk to your attorney first.
REMEMBER: You will not successfully finish your Plan unless you complete this requirement.
7. Can I use credit during my Chapter 13? What if my car breaks down and I need a new one?
Your Order Confirming Plan, signed by the Bankruptcy Judge, states that you may not incur any credit obligations during the life of your plan without the Trustee's written consent. The only time you can act without the Trustee's written consent would be:
(1) serious emergency; or
(2) ordinary expenses for a business approved in your Plan.
Taking on any new credit obligations could jeopardize your Plan and failure to get permission could result in your case being dismissed. The Trustee, in writing, must approve any request for credit before you obligate yourself in any way. The most common credit obligation you may wish to incur is for the purchase of a car. Be sure to contact your attorney if you must buy a car or trade in your old one. Do not let a car dealer talk you into anything before your attorney has had a chance to get involved. The Trustee does approve requests to finance new vehicles, so long as you and your attorney follow the proper procedure.
8. My spouse and I have been talking about fixing up and selling our house while we are in our Chapter 13. Is there anything special we must do?
Your Order Confirming Plan requires you to inform the Trustee and your creditors of the sale, lease, encumbrance or disposal by any method of any real or personal property with a value over $10,000. Your house will certainly qualify for that requirement. Informing the Trustee and creditors can be tricky and may have unexpected consequences. It is very important you learn and understand all the ramifications before you take any steps involving such property. You should contact your attorney well before you list or advertise your property and discuss what you want to do. Selling your property requires a court order, which usually takes about 30 days to obtain.
Remember: Selling or improving expensive property is tricky when you are in Chapter 13. Talk to your attorney first.
9. How can I find out how my plan is progressing?
Once every year, usually in January or February, the Trustee will send you a complete record of all receipts and disbursements. It will tell you exactly how much money the Trustee has received from you and how much and to whom he has made payments. You may also request a progress report. This request must be in writing and sent to the Trustee's office at the address shown in the answer to question #1. It will take a week to ten days for the Trustee to respond. The progress report will give you a summary of your case to date.
10. Can I pay off my plan early or make larger payments to the Trustee so I can finish early?
The Bankruptcy Code requires you to send all your disposable income to the Trustee for at least 3 years. Your disposable income is the amount left over after you subtract your reasonable and necessary living expenses from your net income. This amount is shown as your payments set out in paragraph 1 of your plan. Sometimes your Plan will take more than 3 years in order to complete your obligations. There is, however, one exception to this 3-year rule. You may pay off your plan before 3 years if you pay all of your creditors 100%. If you can't pay the full 100%, you must make your Plan payments for at least 3 years before you are eligible for discharge. You can ask to pay off your Plan after 3 years only if you can pay 100% of what is due to the creditors who must be paid during the life of the Plan, these include secured claims, priority tax claims and back child support in certain instances.
Paying off your Plan early can be complicated and you should check with your attorney before you contact the Trustee.
Making larger payments to the Trustee is required if your income increases. When the Trustee receives unexpected extra payments, he will wonder where you got the extra money. If you want to make larger payments because you received a raise amounting to more than 10% of what you originally reported as your income, you should inform the Trustee of that fact when you begin sending additional money. You will, however, still be required to make payments to the Trustee for 3 years unless you can pay all your creditors 100%. (See above).
Remember: Do not borrow money to make bigger payments to the Trustee hoping that you can complete your Plan before 3 years. You are in this to eliminate your debts and get a "fresh start". Your best bet is to make your scheduled payments on time using your disposable income.
11. My attorney said my plan payments would last for 36 months. Should I stop making payments after I've made 36?
There are a number of reasons why a plan may last more than the anticipated 36 months. It can be difficult to predict the exact status of your case 3 years after it is filed. Sometimes claims that must be paid in full through the Plan are actually higher than originally projected. Other times you may have some requirement necessary to complete your Plan that you have forgotten, i.e. not mailing in your tax refunds. Therefore, you should continue making payments until the Trustee (or your attorney) specifically tells you to stop.
Don't worry about overpaying. Once your case has undergone final audit, the Trustee will refund any overpayment to you, through your attorney. It is better to overpay a little than to underpay and risk having your case dismissed when it is so close to completion.
12. I do not have an attorney. I thought that I was unable to afford one, but Chapter 13 seems complicated and most everyone else has an attorney. Is it too late to get an attorney and how do I pay for it?
It is not too late to get an attorney. Attorneys who regularly practice bankruptcy law normally are paid their fees out of the Plan payments you make. In some cases, you will not have to increase your monthly Plan payment to have an attorney help you. In some cases, it may mean an increase in the length of your plan. It is easy to check about attorney fees and how to include them in your Plan with many of the local attorneys who practice bankruptcy law. Many will give you that information over the phone for free. Check the Yellow Pages.
Remember: The Trustee's office cannot give you legal advice. If your circumstances change after your Plan is confirmed the Trustee strongly recommends you have an attorney represent you.
13. I'm about to make my last payment. I heard that I will get a discharge. What does that mean and how long does it take?
A discharge is your goal. It means you have completed the requirements under your Plan. Most, if not all of your creditors you listed may not contact you about those debts. The discharge order is a document prepared by the Bankruptcy Court and signed by a judge. The Trustee must audit and review your case before the Bankruptcy Court will issue the discharge. This normally takes about 60 days. During that period the Trustee double checks your payments and reviews your case to ensure that you have done everything required from his standpoint. Then the Trustee notifies the Court which will issue your discharge in approximately 30 days.
After all your hard work to complete your Plan, you should now enjoy what has been termed a "fresh start". You should no longer need to endure the credit problems that caused you to seek Chapter 13 relief in the first place. Hopefully you have gained some knowledge and can work to avoid a similar credit crunch in the future.