All Chapter 13 Plan payments are due thirty (30) days after the bankruptcy is filed.
If you are employed, then a Motion will be filed with the Bankruptcy Court asking for an Order to be served on your employer requiring that the bankruptcy plan payments be withheld from your wages.
This process takes some time to complete, so I always recommend to the client that if they receive any paychecks subsequent to the filing of their bankruptcy case where wages have not been withheld, that they make the payment directly to the Trustee.
All plan payments in the Eastern District of Texas have to go the following address:
Chapter 13 Trustee
PO Box 734
Tyler, TX 75710
The amount that is withheld from each paycheck depends on the pay cycle of the Debtor employee.
For example, if you are paid on a bi-weekly basis and your plan payments are $500.00/month, then $230.77 should be withheld from each paycheck.
The reason it is not $250.00 is that there are 26 pay periods in the year for a person who is paid bi-weekly. The withholding would be $250.00/pay period if you are paid semi-monthly.
Chapter 13 plan payments are withheld from wages in the same manner that child support is withheld, so to reiterate, the amount withheld from each paycheck is determined by how often you are paid.
In our example, if $230.77 is not withheld from the first paycheck you receive after the filing of your bankruptcy case, then you need to remit that amount directly to the Chapter 13 Trustee.
All payments made to the Chapter 13 Trustee have to be by Cashier’s Check or Money Order. You should retain a copy of the payment for proof and always note your case number on the check or money order.
Presently there are four ways that plan payments can be made to the Chapter 13 Trustee in Tyler. For a memo regarding these methods directly from the Trustee’s website go here. If you want to set up a bank account for payments to be made you can find the information on how to set that up through TFS go here.
Please do not send plan payments to our office. They must be sent directly to the Chapter 13 Trustee.
If your plan payments become delinquent, then you are not in compliance with the terms of your plan of reorganization and the Chapter 13 Trustee will not agree to confirmation of your plan, or in a confirmed case, will move to dismiss your bankruptcy.
There are two required counseling sessions that a person must complete before receiving a discharge of their debts under the bankruptcy code.
The first of these counseling sessions must be completed prior to the filing of the bankruptcy case.
This initial counseling session is generally referred to as the “pre-filing counseling” session and is mandated by Section 109(h) of the Bankruptcy Code.
The pre-filing counseling must be completed within 180 days of the filing.
Our firm uses CricketDebt for all of our pre-filing counseling. If you cannot complete the required counseling online, then it can be completed over the phone at 866-719-0400.
The second required counseling session must be completed prior to a Debtor receiving a discharge of their debts by the bankruptcy court.
This counseling session is often referred to as the “pre-discharge debtor education course” or “financial management course.”
Our firm uses Solid Start Financial for this course. If you cannot complete the debtor education online, then it can be completed over the phone at 866-719-0400.
The certificate of completion for the financial management course must be filed with the bankruptcy court within 60 days after the date first set for the meeting of creditors as in a Chapter 7 case, as required by Rule 1007(c) of the Federal Rules of Bankruptcy Procedure.
In a Chapter 13 case the certificate of completion must be filed before the Debtor makes their last payment under their Chapter 13 Plan.
There are two required counseling sessions that must be completed by every Debtor prior to receiving a discharge of their debts.
We often have clients call us advising that they have received a document from the bankruptcy court titled “Notice of Missing Documents to Individual Debtor.”
This notice generally relates to the filing of the certificate of completion for the “pre-discharge” or “financial management” course.
We don’t ever want you to ignore any notice you receive in the mail, but we would ask you to keep in mind the deadlines for filing the certificate.
The certificate of completion for the financial management course must be filed with the bankruptcy court within 60 days after the date first set for the meeting of creditors in a Chapter 7 case, as required by Rule 1007(c) of the Federal Rules of Bankruptcy Procedure.
In a Chapter 13 case the certificate of completion must be filed before the Debtor makes their last payment under their Chapter 13 Plan.
When we correspond with our clients to complete the financial management course we would ask that you complete the course without delay, but please do not panic over the notice received from the bankruptcy court.
Many times these notices are generated prior to the meeting of creditors, so you have a sufficient period of time to complete the course.
A Debtor cannot acquire new debt while in an active Chapter 13 case without receiving approval of the Chapter 13 Trustee and/or the Bankruptcy Court.
Sometimes circumstances dictate that you must acquire new debt during a pending Chapter 13 case.
If you find yourself in such a situation, then please contact us so we can discuss your individual circumstances.
The withdrawal of money from a 401K plan by the Debtor is not considered the acquiring of new debt, because technically the Debtor is simply borrowing their own money.
More information on incurring debt while you are in a Chapter 13 bankruptcy can be found on the Trustee’s website here.
If you are in a Chapter 13 bankruptcy and you are making mortgage payments, your plan of reorganization requires that those payments be made in a timely manner.
When we use the term “post-petition” mortgage payments we are referring to those payments that come due after the bankruptcy case is filed.
Since a lot of Chapter 13 bankruptcies are filed because the Debtor is delinquent in mortgage payments, it is important for the Debtor to remain current with the post-petition mortgage payments.
If a Debtor fails to remain current on the post-petition mortgage payments, then the mortgage company will move the bankruptcy court to lift the automatic stay to proceed with foreclosure.
If the mortgage company moves the court to lift the stay, then the Debtor will likely face additional fees from their attorney and could likely face additional attorneys fees for the mortgage company’s attorney.
Because mortgage companies are not perfect in their record keeping we always suggest that you make your payments in a manner that will provide proof of the payments.
A copy of a money order, western union or cashier’s check is recommended.
If you are making the payments by personal check, then make sure you keep copies of your cancelled checks or bank statements.
All post-petition mortgage payments in the Eastern District of Texas are currently made directly by the Debtor. In other words, the payments are not made by the Chapter 13 Trustee and are not covered by the plan payments being made by the Debtor.
