30 Jun You Are Responsible for Getting Payments to Your Chapter 13 on Time
If you have been researching the Chapter 13 process, you know that your Chapter 13 plan amounts to a three to five year repayment plan in which you send money to the Chapter 13 trustee, who then disburses that money to your creditors.
There are a number of things that can go wrong in a Chapter 13, most of which can be fixed or negotiated by your lawyer. The one thing your lawyer cannot do, however, is make your Chapter 13 payments.
In the 20+ years I have been representing debtors in Chapter 13 cases, missed, late or misplaced Chapter 13 payments cause the most problems with cases that are otherwise viable. In my Northern District of Georgia bankruptcy practice, I make it a point to educate my clients about the importance of keeping the funding of their Chapter 13 plans current, but the advice I give my clients is not limited to cases filed in Atlanta. Here are a few rules to keep in mind:
- you and you alone are responsible for getting money to the trustee – if your case is being funded by payroll deduction, you must take an active role in making sure that your employer is promptly sending in money. If you come to your confirmation hearing and your employer has not yet sent money into the trustee, your case will be dismissed. Employers may not be aware of your confirmation deadlines. I can’t tell you how many times the trustee’s account for my client showed a delinquency, even though the full amount had been taken out of my client’s paycheck. As far as the trustee is concerned, Chapter 13 payments are your problem. If your employer is withholding money and not sending it in, talk to your lawyer.
- if your case is being funded by payroll deduction, realize that many employers may not enter the deduction allocation into your file for 2 to 4 weeks. This is especially true if you are a federal employee. Until the payroll deduction kicks in, you and you alone must tender payments directly to the trustee.
- your trustee payment obligation starts immediately – if someone told you that you don’t start paying the trutsee until after confirmation, you have been given bad advice. The pre-confirmation period amounts to a probation period – this is when you prove that your plan is feasible. The fundamental test of your plan’s feasibility relates to your ability to make your plan current.
- if you need to get money to the trustee within the next seven (7) days, hand deliver your payment. If you mail a payment, it may get delayed or lost
- when you send money to your trustee make sure that your payment has your name and case number legibly written thereon. Chapter 13 trustees oversee thousands of cases. You do not want payment to your plan delayed while someone in the trustee’s office tries to decipher handwriting or match up a payment to a case number
- pay by check if possible. Lost checks can be traced, canceled and reissued. Lost money orders are much more difficult to trace. You may need to wait several months to trace a lost money order.
- take an active role in monitoring the funding of your case. Ask your attorney to calculate exactly how much you need to have on hand in your trustee’s office by confirmation. Double check to make sure that your plan is and remains current. If you miss a payment for some reason, speak to your attorney and get your payment caught up before the trustee catches the missed payment and files a motion to dismiss. The trustee may not catch the missed payment for months or years – just because you don’t hear something immediately, you are not in the clear.
- speak to your attorney before making any extra payments to the trustee. Sometimes it is ok to make extra payments and sometimes it is not. Don’t guess – you have paid for legal advice and you should use it.
Jonathan Ginsberg, Esq.
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