Chapter 10 Handling Routine Matters after You File

• Library: Chapter 13 Bankruptcy (Nolo) (2020 Ed.)

CHAPTER 10: Handling Routine Matters After You File

The Automatic Stay

Dealing With the Trustee

Hold on to Property You Owned Before Filing

Report Certain Property You Receive After Filing

Provide the Trustee With Proof of Insurance

Make Your First Payment

Make Adequate Protection Payments

If You Operate a Business

The Meeting of Creditors

Prepare for the Meeting

Getting to the Meeting

What Happens at the Meeting

Changing Your Plan Before the Confirmation Hearing

The Confirmation Hearing

What Happens at the Confirmation Hearing

Income Deduction Orders

The Judge's Order Confirming Your Plan

Changing Your Plan After a Failed Confirmation Hearing

Amending Your Bankruptcy Forms

Filing a Change of Address

Filing Tax Returns

Filing Annual Income and Expense Statements

Personal Financial Management Counseling

Chapter 13 Debtor's Certifications Regarding Domestic Support Obligations and Section 522(q) (Form 2830)

Once you have filed all of your Chapter 13 bankruptcy papers, including your repayment plan, the bankruptcy trustee and the court take over. They will examine your papers and schedule court hearings. Your creditors also get involved; they'll file claims so they can get paid by the trustee once you start making plan payments. Creditors might also object to your plan if they think they're getting shortchanged.

Your attorney will probably have to make two or three court appearances and do some negotiating with creditors—possibly even amend your plan. This chapter tells you what to expect after you file and how to move your case along.

CAUTION

Emergency filing reminder. If you you were short on time and didn't file all of your bankruptcy papers, you must file the remaining documents within 15 days of filing your petition. (Bankruptcy Rules 1007(c), 3015(b).) If you don't, the bankruptcy court will dismiss your case.

The Automatic Stay

When you file your bankruptcy papers, the automatic stay will go into effect. (See Ch. 2 for detailed information on how the automatic stay works.) Creditors won't know about your case until they receive notice of your bankruptcy filing from the court, however, and it might take several days for the notice to reach them. If you want quicker results, you should notify the creditors yourself. This is especially true if you file shortly before a foreclosure sale, a court date, the start of a wage garnishment, or some other time-sensitive event. You or your attorney will likely do so by faxing a letter to the appropriate creditors. The letter will notify them of the bankruptcy filing and that the automatic stay precludes any further collection actions immediately. You'll want to be sure to include the bankruptcy case name and number, the filing date, and the court and district in which you filed. If you are involved in a court action, such as a foreclosure proceeding or collection lawsuit, you can notify the court by sending the letter to the courtroom clerk where the lawsuit is pending.

The bankruptcy court almost always lifts (removes) the stay at the end of the confirmation hearing, because your creditors are bound by your plan. They cannot sue you or take other action to get paid. Their only means of being paid is through the terms of the confirmed plan.

Dealing With the Trustee

Within a few days after you file your bankruptcy petition, the bankruptcy court assigns a Chapter 13 trustee to oversee your case. You will receive a letter from the court, giving the name, address, and phone number, and email address of the trustee. The trustee might send a separate letter with a list of financial documents the trustee wants copies of in addition to the required bank statements and tax returns, and the date by which the trustee wants them. For instance, some trustees require mortgage and auto loan statements, proof of insurance, and copies of marital settlement agreements and other court orders.

Within a few days after the trustee is appointed, the court will send you and your creditors a Notice of Chapter 13 Bankruptcy Case (Form 309I). This notice usually contains:

• if you filed the Chapter 13 plan with your petition, a copy of the plan and the confirmation date
• an explanation of the automatic stay
• the date, time, and place of the meeting of creditors (see below)
• the date by which creditors must file a debt discharge complaint or a motion objecting to the case,and
• the date by which creditors must file their claims (more below).

You and your attorney could also receive a letter of introduction from the trustee explaining the trustee's particular procedures. For instance, the letter might explain where to send your payment and that the trustee only accepts payments by cashier's check or money order.

Many Chapter 13 trustees play a fairly active role in their cases. This is especially true in small suburban or rural judicial districts or districts with a lot of Chapter 13 bankruptcy cases. For example, a trustee might:

• give you financial advice and assistance, such as helping you create a realistic budget (the trustee cannot, however, give you legal advice)
• actively participate in modifying your plan at the meeting of the creditors, and
• participate at any hearing on the value of an item of secured property, possibly even hiring an appraiser.

For more information on the role of the Chapter 13 trustee, see Ch. 1.

Hold on to Property You Owned Before Filing

Once you file your bankruptcy papers, the property you owned before filing is under the supervision of the bankruptcy court. Don't throw out, give away, sell, or otherwise dispose of any property unless and until the bankruptcy trustee says otherwise.

Report Certain Property You Receive After Filing

Despite the trustee's great interest in your finances, your financial relationship with the trustee is not as stifling as it might sound. In general, you still have complete control over money and property you acquire after filing—as long as you make the payments called for under your repayment plan and you make all regular payments on your secured debts. If you don't make those payments, your creditors can file an objection before the confirmation hearing or even file a motion to dismiss your case.

You can use income you earn after filing that's not going toward your plan payments to purchase everyday items such as groceries, personal effects, and clothing. If you have any questions about using your post-filing income, ask your attorney.

If you receive certain kinds of property (or become entitled to receive it) during your bankruptcy case, you must report it to the bankruptcy trustee. Here's the list:

• property you inherit or become entitled to inherit
• property from a marital settlement agreement or divorce decree, or
• death benefits or life insurance policy proceeds.

If any of this property is nonexempt, you might have to modify your plan to make sure your unsecured creditors are still getting paid at least as much as they would have gotten if you had filed under Chapter 7. (Ch. 5 explains how to calculate how much your unsecured creditors are entitled to receive.)

Provide the Trustee With Proof of Insurance

If you are behind on payments on a secured debt, such as a car loan, and you plan to make up the payments and get back on track during your Chapter 13 case, you might have to give the trustee proof that you have adequate insurance on the collateral. This requirement is meant to protect the creditor if the collateral is destroyed or damaged.

Make Your First Payment

Within 30 days after you file your petition, you must make the first payment proposed in your Chapter 13 repayment plan. This deadline usually comes up before the meeting of creditors, and always before your confirmation hearing. The reason you must make the payment so early is to show that you are filing in good faith and that you can, in fact, make the payments.

It's crucial to meet this first deadline. So that you don't forget, count out 30 days from the date you filed your petition and mark the deadline on a calendar. It might be better, though, to make the payment a little earlier—for example, the day after you get paid, so you'll be sure to have the funds. If your wages are currently subject to wage attachments, garnishments, or voluntary payroll deductions, your attorney will get those removed so that you have the money to make your Chapter 13 payments. The attorney will usually do this by faxing a letter giving the creditor notice of the filing of a bankruptcy case, as discussed above.

If you do not make your first payment on time, the bankruptcy court can convert your case to a Chapter 7 bankruptcy, dismiss your case, or deny confirmation of your plan. A few courts consider the failure to make the first payment evidence that the plan was not submitted in good faith and is an abuse of the Chapter 13 bankruptcy system. In that case, the court would lift the automatic stay and allow your creditors to continue their collection efforts. If the court felt you were egregiously abusing the system—for example, you've filed multiple Chapter 13 bankruptcy cases and haven't made payments in any of them—the court would likely dismiss your case and possibly fine you and bar you from ever filing for Chapter 13 bankruptcy again.

Don't be concerned about the fact that you will start making your payments before your plan is confirmed. Doing so allows you to complete your plan within 36 or 60 months. If the court doesn't confirm your plan, the trustee will return all payments other than "adequate protection payments" (more below).

Make Adequate Protection Payments

Within 30 days after you file for bankruptcy, you will have to start making payments (called adequate assurance payments or adequate protection payments) to creditors whose claims are secured by personal property to cover the period between the date you file and the date your plan is confirmed.

Courts are not in agreement as to how or when you make these payments or how to calculate...