Filing for Chapter 13 bankruptcy is an important step toward regaining financial control while safeguarding your assets. At WH Law, we’re dedicated to guiding you through every aspect of this process, ensuring you feel supported and informed. This guide delves into the critical components of Chapter 13 bankruptcy to help you understand your responsibilities, avoid pitfalls, and achieve a successful resolution.
So you’ve filed Chapter 13 Bankruptcy. Now what?
One of the cornerstones of a successful Chapter 13 bankruptcy is the timely and consistent payment to the Trustee. These payments fund your repayment plan and protect the assets you want to keep. Here’s what you need to know:
Making your Payments
- Due Date: Payments are due on the 22nd of each month, starting the month after your case is filed.
- Payment Methods: There are multiple different options for making your payment that include payroll withholding, automatic and one-time bank account drafts, check, and MoneyGram.
- Payroll Withholding: If you’ve elected to use payroll withholding, it may take several weeks to activate. Until then, manual payments are required to avoid falling behind.
You can go to the website for your Chapter 13 Trustee to explore the different payment options available to you and set up payments. If you’re in doubt about the best option for you, reach out to your Bankruptcy team at wh Law.
Why Payments Matter
These payments are not optional; they are essential to keeping your assets and moving your case forward. Missing payments can lead to serious consequences, including case dismissal.
What If My Income Changes?
If your payment is tied to your income, significant changes—like reduced hours or unemployment—may qualify you for a plan adjustment. However, this requires prompt communication with your attorney. If your payment is not tied to your income, it will not decrease unless you want to surrender property.
Life happens—unexpected expenses or reduced income can make it challenging to meet your payment obligations. However, you’re still required to make a full payment to the trustee every month and if you’re on a strict compliance period, a single missed payment can lead to case dismissal.
If you anticipate difficulty making a payment:
- Contact Us Immediately: We can help explore potential solutions, such as adjustments or grace periods.
- Make Up Missed Payments Quickly: A shortfall in one month can often be resolved by catching up the following month.
- Make a partial payment: If you can manage it, making a partial payment is better than no payment and won’t put you as far behind on your payments.
Ignoring missed payments can result in motions to dismiss being filed by the Trustee or creditors, or your payments increasing. Don’t let this derail your progress—reach out for support
Will my payments change?
There are a number of things that may cause your plan payment to change. It is very rare that the plan payment will decrease unless you surrender an asset that you were paying for. Your payment could go up for any of the following reasons:
- Forced insurance on a vehicle (Priority Insurance)
- A secured or priority claim, such as your car or taxes, comes in higher than the amount estimated
- Mortgage payments change due to escrow increases
- Taxes or child support rearrange or increase
- Make up for missed payments
- Changes in income or expenses
What Happens Next?
Confirmation
Chapter 13 bankruptcy is a negotiation with your creditors and trustee, and no one gets paid until the Trustee confirms your Plan payment. After your case and Plan are filed, but before it’s confirmed, we’ll go through a period where your creditors and trustee file Objections to Confirmation. We’ll resolve these objections on your behalf and let you know if anything is needed from you or if your plan payment is going to change. Once the objections are resolved, your plan will be confirmed and creditors will start receiving payment.
Potential Objections to the Plan
What is an Objection?
After filing your case, including the “plan” to repay your creditors, the Trustee and your creditors have time to file an objection to the plan. An objection is basically a written statement from the Chapter 13 Trustee or a creditor that there is something within the case that needs to be adjusted before the plan is confirmed. This doesn’t mean anything is wrong with your case; just that something needs attention.
Objections are a routine part of the Chapter 13 process. It is our job to make sure they are addressed.
Trustee Objections
Part of the Trustee’s role is to review your plan and object to any aspects
of it that he or she believes do not follow the law. As you have probably
guessed, bankruptcy law is complicated! There are several moving
pieces, and the Trustee will point out any aspect of your plan that needs to be adjusted to conform to the laws of bankruptcy.
Creditor Objections
Any of your creditors can object to the plan we submit on your behalf.
Often, these objections request that we amend the plan to reflect a correct amount of debt to be repaid, or requests for an increase in the interest rate. Remember, we are YOUR representative, it’s our job to work out a settlement with the creditor that is most favorable to you, and that’s what we will do.
Hearings and Motions
Notice of Hearing
After the Trustee or a Creditor files an objection, or when there is a motion filed in your case, a hearing will be set by the Bankruptcy Court. Most of the time, you will not need to attend the scheduled hearing. These objections are more often than not resolved outside of court. However, if we believe you may need to attend, our office will reach out and let you know. If you haven’t heard from us, it is a safe assumption that you will NOT need to attend, but you can always text us to confirm.
It is normal to receive a couple of rounds of objections, or notices of multiple hearings. This is not a cause for concern and does not indicate a problem with your case.
Motion to Dismiss
If you receive a motion to dismiss, it is likely from the Trustee as a result of missed plan payments. A hearing will be set for the motion to dismiss, but most of the time we resolve these with a period of strict compliance, which means you must make full and timely payments for a certain number of months. Missing one payment while under strict compliance will result in your case being dismissed.
Motion for Relief
If you have surrendered property within your Chapter 13 Plan, the creditor must file a motion for relief in order to come pick up the property from you. We will provide them with your contact information to facilitate this process.
Other Requirements
Creditor Meeting (or 341a Meeting of Creditors)
The 341 meeting is a mandatory part of the process where the Trustee or their staff attorney ask questions about your financial situation, including income, expenses, and assets. Your creditors have an opportunity to attend and ask you questions as well (hence “creditor meeting”).
It may help you to have a copy of your bankruptcy filing during the meeting, but you don’t need to bring anything with you. We will provide the Trustee with a copy of all the documents they need before the meeting.
These meetings are set by the court and we don’t have the ability to reschedule them. If you are unable to attend the meeting, we can request that it be reset for another day but this meeting is essential and you should make every effort to attend. If you don’t attend the meeting, your case will be at risk of dismissal.
Do I Need to Complete a Second Bankruptcy Course?
Yes, a second bankruptcy course is required before completing your repayment plan. Use the same provider as the first course, or access the Trustee’s free online option. Keep your case number handy—it serves as your access code for the course.
Vehicle Insurance
Maintaining full-coverage insurance is critical if you’re paying for a vehicle in your plan. Failure to provide proof of insurance will result in forced insurance, increasing your payment. This forced insurance is not liability insurance which is required under Arkansas state law; it only pays the creditor if the car/collateral is damaged.
Staying on Track with Your Case
Direct Payments to Creditors
If you’re paying a mortgage or a vehicle loan outside the bankruptcy plan, you may lose online account access. Contact the creditor directly to reinstate access and keep a record of your payments.
Voluntary Case Dismissal
You have the right to dismiss your Chapter 13 case voluntarily, but this can have serious consequences, including repossession of assets by creditors. Always consult with us before making this decision.
Reasons to Contact WH Law
We’re here to support you throughout the case. Common reasons to reach out include:
- Adding creditors to your plan.
- Addressing creditor harassment.
- Reporting changes in income or address.
- Obtaining approval for new debt (e.g., a car loan).
Preparing to sell significant property, like a house or car.
The Road Ahead: What to Expect
Chapter 13 bankruptcy is a process, and it’s normal to feel unsure about what lies ahead. Remember, objections and motions are routine, and your attorney is here to handle the complexities of your case.
After the initial months, you might not hear from us as frequently—that’s a good sign! But we’re always available to address your concerns or provide updates.
Closing Thoughts
At WH Law, our goal is to make Chapter 13 bankruptcy as straightforward and stress-free as possible. This process is an opportunity to regain financial stability while protecting what matters most.
If you have questions, concerns, or need guidance at any stage of your case, don’t hesitate to reach out. We’re here to help you succeed and achieve your fresh financial start.
