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McDonald Chapter 13 U.S. Bankruptcy Trustee answers your frequently asked questions

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Do you need to know if I move?

Yes. The Trustee must have your current address at all times in order to mail important documents throughout the life of your plan. Any time you change your address, you must notify the Trustee’s Office, the court and your attorney in writing, not by phone. All correspondence should be mailed to: Chapter 13 Trustee Office,  3144 Davenport Ave.,  Saginaw, MI 48602.  This address is for correspondence only. Never send a payment to this physical address.

What if I have legal questions?

The Trustee and his staff cannot give legal advice. Any and all legal questions concerning your case, a creditor, your rights, your options or changes in your situation should be directed to your attorney. Your attorney must continue to represent you as long as your case is active or until the judge permits him or her to withdraw from your case. In most cases, your attorney’s legal fees will be paid through your plan payments.

Will my creditors continue to call?

All the creditors listed in your Chapter 13 plan are sent a notice advising them of the filing of your plan. They are subject to an Automatic Stay Order that prohibits them from contacting you. In the event that you are contacted, do not discuss the debt with them, but instead give them your Chapter 13 case number and the name of your attorney. Get the name of the person contacting you and report it to your attorney immediately.

It is important to note that an automatic stay does not prohibit contact initiated by you. You might need to contact a creditor to obtain information on interest paid on a particular debt. This would most likely be needed for filing your tax returns. You might also want to contact mortgage holders at the beginning of your case and on a yearly basis to determine that the monthly payments and escrow balances are correct. This is important to ensure that when you complete your Chapter 13 plan, you will be current as to the mortgage payments and escrow account.

How will my house payment be handled?

If you were behind in your mortgage payments at the time you filed your bankruptcy, your mortgage payments must be made through the Trustee’s Office. This means that you will include your mortgage payment amount in the monthly plan payment you send to our office, and then our office will then make the payment to your mortgage holder. All arrearages, up to the date of filing, are included as a secured debt also to be paid through the plan. If no mortgage delinquency existed at the time you filed your petition, you have the option of making your payments directly to your mortgage holder. If you choose to exercise this option, you are responsible for making your regular monthly payments to the mortgage company. It is vital that you do so in a timely manner. If something unforeseen happens and you are unable to make a payment, contact your attorney immediately. Whether your mortgage payment is paid through the Trustee’s Office or by you directly, you must maintain adequate insurance on your home if it is not included in your mortgage payment. If you are making your mortgage payments directly, please note that failure to make those payments on time could result in losing your home to foreclosure. Please be advised that if your mortgage payments are being made through the Trustee’s Office, you will resume making direct monthly mortgage payments after your plan is completed. TIP: Many insurance companies give a lower rate if you have both your homeowners insurance and your car insurance with the same company.

I am thinking about refinancing my mortgage. What do I do?

Contact your attorney. He or she can help you determine if this is in your best interest. Your attorney will need to know the terms of the new loan (i.e. interest rate and monthly payment). If you and your attorney decide it is in your best interest to refinance, your attorney will request a payoff from this office and prepare the appropriate paperwork for filing with the court.

Is my car payment included in my plan?

In most cases, your vehicle(s) will be included in your plan. It is extremely important for you to maintain adequate insurance on your vehicle. Please note that the Trustee’s Office does not hold titles to any vehicles. If you have any problem obtaining a car title after your vehicle has been paid through the plan, you need to contact your attorney.

Will my co-signers be protected by my Chapter 13 plan?

A co-signer, co-maker or guarantor (co-debtor) on any of your personal debts is generally protected by a Co-Debtor Stay, which extends to them the same protection from creditors as you have. If that person has given collateral for the loan, the creditor must request the court for relief from the automatic stay in order to proceed against the property. The co-debtor stay will only provide protection for the amount of the debt your plan proposes to pay. If your plan is not scheduled to pay the co-signed debt in full, a creditor may obtain permission to collect the unpaid portion of the debt from your co-signer, co-maker or guarantor. Your discharge on a debt is personal to you and does not necessarily affect a co-signer’s obligations. If you have any questions about whether or not any co-signer on a debt is protected under the terms of your plan, make sure you talk to your attorney about their treatment in the plan.

May I buy any property while I’m in the plan?

All of your disposable income is considered part of your bankruptcy estate and must be committed to the plan for the first 36 months. You cannot buy any major purchase without first obtaining the Trustee’s permission. This includes refinancing. Your attorney must submit the appropriate paperwork asking the Trustee to consider your request.

May I sell any of my property while I’m in the plan?

All of your property is considered part of your bankruptcy estate. You cannot sell any major part of that estate, including but not limited to, your home, car, land, fine art or jewelry without the permission of the court. Your attorney must submit the appropriate paperwork asking the court to consider your request to sell property.

May I continue making contributions to my 401(k)?

Generally, unless you are paying all of your creditors 100%, you cannot make 401(k) contributions or loan repayments while you are in the plan. If you have any questions, please talk to your attorney.

May I pay off my plan early?

If you want to pay off your plan early, you must first contact your attorney. Depending upon the circumstances of your case, it may not be in your best interest to pay off the case early. Your attorney can discuss your options with you. If you and your attorney determine that paying off your case is in your best interest, your attorney will contact the Trustee’s Office to obtain a payoff amount for your case. Before you are given a payoff, your entire file must be reviewed. This can be a lengthy process, so your patience is appreciated. Your request will be processed as quickly as possible. All cases are subject to a final review and approval of the court. Be aware that this could take as long as two months to receive.

What happens to any debts that are not paid in full?

If your unsecured creditors did not receive the entire amount originally owed to them, all remaining balances will be “discharged” or legally forgiven upon the completion of your plan. Creditors cannot resume collection activity on these debts. Unique debts contained in your plan that cannot be discharged include student loans, child support obligations and fines created as a result of your causing injury while under the influence of drugs or alcohol. You will be responsible for any balances due on debts of these types after the completion of your plan. Consult with your attorney if you have a specific question about a particular debt.

What about debts paid in full after completion of the plan?

When a creditor has been paid in full through the plan, the creditor may, upon your request, send the “paid in full” papers to you. Court records will officially show your plan was paid in full according to its terms and will overrule any claim the creditor might make for additional money from you. Should you receive a request for additional money after your plan completes, review the matter with your attorney.

How long will my bankruptcy filing be reflected in my credit report?

Your Chapter 13 bankruptcy will be reflected on your credit report for 10 years after any court judgments.

Is there life after debt?

Absolutely. Completing a Chapter 13 plan is an accomplishment of which you will be proud, and rightfully so. This Trusteeship strongly believes in providing learning opportunities for you while it serves as a channel for your debt repayment.