Important Information About... Provided By: Ellen W. Cosby, Trustee Baltimore, MD
What is Chapter 13? 2 Important Dates 3 Important Parties 6 Contacting the Trustee's Office 10 Plan Payments 12 Some Notes on Claims 17 Types of Creditor Payments 19 Chapter 13 & Your House 21 How the Trustee's Office Pays Out 23 Semi-Annual Reports 24 A Quick Review 25
What Is Chapter 13 Bankruptcy? It is... 1. VOLUNTARY - YOU choose to file bankruptcy. YOU choose to stay in bankruptcy. If you decide - at any time - that you do not want to be in Chapter 13, then discuss other options with your attorney. For example, you could choose to file a Chapter 7 bankruptcy instead. 2. PROTECTION - While in Chapter 13, your creditors are usually not allowed to try to collect from you. Refer any phone calls or letters which you receive to your attorney. 3. A PAYMENT PLAN - In Chapter 13, you must re-pay some or all of your debts over a period of 3 to 5 years. You pay the Trustee's office; the Trustee's office pays your creditors. You suggest how much your plan payment should be based on your budget, but it must be enough to make certain minimum payments and show good faith. 4. A LEGAL PROCESS - Get help understanding it from: (1) THIS PAMPHLET which gives general information; (2) YOUR ATTORNEY who can and should answer all legal questions about your case; (3) all NOTICES AND INFORMATION which come by mail; read them and keep them. 5. A RESPONSIBILITY - To stay in Chapter 13, you must provide paperwork, attend meetings, make all plan payments on time, file documents with the court, and more. In short, this is YOUR plan; you have the responsibility - and the power - to make it work. - 2 -
Important Dates in Your Chapter 13 Case The Bankruptcy Court will mail you a Notice of Chapter 13 Bankruptcy Case at the beginning of your case. This notice contains basic information about your Chapter 13 case. Read it carefully, and tell your lawyer if there are any mistakes. The notice contains many important dates. Write them down and remember them. The following pages explain some of these dates. TAKE NOTICE OF THE NOTICE! PETITION DATE This is the date that your "Voluntary Petition" was filed with the court. The petition is the official document that you signed to begin the bankruptcy process. This date is significant because several important events are counted from the date, including when your first plan payment comes due and when your mortgage and other secured debt payments have to start again. - 3 -
MEETING OF CREDITORS Your notice will give you the date and time of this meeting. You are REQUIRED to come. At the meeting of creditors, a person from the Trustee's office will talk with you about your plan. Your creditors might also attend. The meeting will be held at: Office of the U.S. Trustee United States Courthouse, Room 2650 101 W. Lombard Street Baltimore, MD 21201... Be there on time! [NOTE: the U.S. Trustee and the Chapter 13 Trustee are NOT the same. Do not deliver plan payments or documentation needed by the Chapter 13 Trustee to the U.S. Trustee s office described here. See page 11 of this booklet for the Chapter 13 Trustee s address and contact information.] CONFIRMATION HEARING Your notice will give you the date and time of this hearing. You are REQUIRED to come unless excused by the Trustee. The hearing is when a decision is made about approval of your plan. Your plan will either be: Confirmed (Approved) Denied Confirmation (You must dismiss or convert your case) Continued (You will have to come back for another hearing) - 4 -
The confirmation hearing will be held at: United States Courthouse 101 W. Lombard Street Baltimore, MD 21201 The particular courtroom where the hearing is located will depend on which judge is assigned to your case. Check the notice for the specific courtroom you need to go to for your confirmation hearing.... Be there at least 45 minutes early! FIRST-PAYMENT DATE $$ This date is not listed in the notice mentioned above but it is very important to remember. Your first plan payment to the Trustee is due 30 days after your petition date. You MUST make this and all monthly payments on time in order to stay in Chapter 13. SPECIAL INFO FOR EASTERN SHORE FILERS If you reside in Caroline, Dorchester, Kent, Queen Anne s, Somerset, Talbot, Wicomico or Worcester County, you do not have to come to the Western Shore for either the meeting of creditors or the confirmation hearing. Instead of the locations described above, these events will be held at: United States Courtroom U.S. Post Office Building, Room 104 129 E. Main Street Salisbury, MD 21801-5 -
..... people, not events! THE DEBTOR That's you! You are identified by a CASE NUMBER. When you filed your "Voluntary Petition," the court assigned a 7-digit number to your bankruptcy case. Always keep it handy. Write your case number on: $$$$ ALL PAYMENTS ALL LETTERS ALL PAPERS that you send to the Trustee's office, the Court, or your attorney's office. THE JUDGE There are four bankruptcy judges who handle cases filed in the Bankruptcy Court in Baltimore (the Northern Division of the District of Maryland). Your case will be assigned to one of these judges. The judge rules on the legal issues that arise in your bankruptcy, including confirmation of your plan. - 6 -
YOUR ATTORNEY Your attorney is your legal advocate - the person who should "look out" for your interests. If you have questions about:? your case? your creditors? your rights? your choices...ask your attorney. Prior to the filing of your bankruptcy case, your attorney was required to have signed with you a written contract that clearly explains: - the services your attorney is committed to provide to you during this case, - the fees or charges for the described services, and - the manner in which the fees for services will be paid during the case. A copy of this agreement must be given to you. Make sure that you review this contract and understand it. While your fee agreement with your attorney may require additional fees for additional services performed, your attorney is required to disclose all additional charges to the Court. If you believe that your attorney is not providing the services described in the contract as agreed, please advise the U.S. Trustee and the Chapter 13 Trustee in writing. If your attorney does not return your calls, try sending a letter to document your concerns and your attempts to get a response. You can copy the letter to the U.S. Trustee and/or the Chapter 13 Trustee. - 7 -
THE TRUSTEE Your trustee is ELLEN W. COSBY The Trustee's office does two major things: (1) Reviews new plans to see if they meet the requirements of Chapter 13, and reports on the plans to the Court. (2) Administers plans which are confirmed by the Court (Takes in money and distributes it to creditors) The Trustee's office will answer questions about the administration of your plan BUT... CAN NOT and WILL NOT answer legal questions or give legal advice. THE CLERK'S OFFICE The Clerk's office keeps the official, public record of your bankruptcy. If you or anyone else wants to look at any papers which have been filed in your case, then he or she must contact the Clerk's office: U.S. Bankruptcy Court 8530 U.S. Courthouse 101 W. Lombard Street Baltimore, MD 21201 phone: (410) 962-2688 www. mdb.uscourts.gov - 8 -
YOUR CREDITORS Creditors are the people and companies to whom you owe money. After your plan has been confirmed by the Judge, the Trustee's office will start paying your pre-petition creditors. In most cases, your creditors are paid in the following order: 1. ADMINISTRATIVE - Any fees still due to your attorney may be paid through the Trustee's office. 2. PRIORITY The common priority claims are taxes owed to the Internal Revenue Service and the State. 3. SECURED Any creditor who holds a lien on your property is secured. Secured creditors include your mortgage lender and your car loan company. 4. UNSECURED - All other creditors are unsecured. They generally will be paid last, after all administrative, priority, and secured creditors have been paid in full. Credit card companies are usually unsecured creditors. BE AWARE! The Trustee's office will send payments to a creditor only if: The creditor is covered in your Chapter 13 plan. Your Chapter 13 plan has been confirmed by the Court. A Proof of Claim has been filed by that creditor. (See page 17 for more information on Proofs of Claim.) You are making required payments to the Trustee's office. - 9 -
CONTACTING THE TRUSTEE'S OFFICE The Chapter 13 Trustee's office can help you only with certain questions and concerns that you have about your case. We CAN NOT: Give any kind of legal advice. Give you permission to miss payments. Cut deals with your creditors. Give you permission for a new loan or to sell property. Change claims that your creditors filed with the Court. We CAN: Give information about receipts. Give information about disbursements to your creditors. Give you factual information about your case. Explain the procedures in administering your plan. If you have a question or concern that the Trustee's office CAN help you with, write or call. - 10 -
WRITE Mail to: Ellen W. Cosby, Trustee 300 E. Joppa Road, #409 Baltimore, MD 21286 Fax: 410-825-5904 (please do not fax documents over 6 pages) E-mail: inquiries@ch13balt.com Include your name & case number on all correspondence! PHONE Call: (410) 825-5923 Hours: 9:00 a.m. to 4:00 p.m. Talk To: The person who answers the phone can help you with your question or concern. Have your case number handy. ===================================== If you move at any time while in Chapter 13... Notify the Trustee's office, the Court, and your attorney of your new address... IN WRITING! (We cannot return any money due back to you at the end of your case unless we have a good address!) - 11 -
Plan Payments Chapter 13 is a payment plan. For your plan to work, you must make all required payments ON TIME and IN FULL. YOU ARE RESPONSIBLE FOR ALL PAYMENTS. In Short... The next few pages answer important questions about your Chapter 13 plan payments. Read them all carefully! - 12 -
WHO DO I PAY? Make plan payments to Ellen W. Cosby, Trustee. Do not make plan payments to your attorney; do not make payments to the Bankruptcy Court. HOW DO I MAKE PAYMENTS? 1. Write a check OR get a money order (no cash). Make it out to Ellen W. Cosby, Trustee. 2. Write your NAME and CASE NUMBER on the payment. 3. Mail each payment to: Ellen W. Cosby, Trustee P.O. Box 1838 Memphis, TN 38101-1838 4. Include a letter with any payment that needs special handling. If you expect us to take some action when your payment comes (such as withdraw a motion to dismiss your case), you must send a cover letter with the payment so we know it needs special attention. If you need a prompt response, you must send a certified check or money order. We do not take any action based upon a personal check until it has had time to clear. DO NOT SEND POST-DATED CHECKS! - 13 -
WHEN DO I PAY? Your first payment is due 30 days after your petition date. The second payment is due a month later; the third payment is due a month after that; etc... HOW MUCH DO I PAY? The amount of your monthly payment is stated in the Chapter 13 Plan that you signed. Once your plan is confirmed, it is set out in the order confirming the plan.? Still not sure how much to pay? Ask your attorney or call the Trustee s office. WHAT IF I CAN'T MAKE PAYMENTS? Contact you attorney IMMEDIATELY to talk about: 1. modifying (changing) your plan, 2. converting your case (to a different kind of bankruptcy), 3. dismissing your case (ending it), 4. other options. - 14 -
WHAT IF I DON'T MAKE PAYMENTS? Your Chapter 13 plan is DOOMED! If you do not make your plan payments on time, the Trustee's office MUST & WILL notify the Court and ask that your case be dismissed. WILL I BE ON A WAGE ORDER? YES! If you are employed then a wage order will be sent to your employer. The wage order will be processed only after the Court approves your plan unless you file a motion requesting that it be processed earlier. With the wage order, your plan payment will be deducted from your paycheck. If you filed a joint petition, you may choose which spouse's employer receives the order. Write the Trustee s office to let us know which employer you choose to use for the wage order. Wage order deductions will start a month or two after confirmation. You must keep making payments to the Trustee until you see the deduction from your paycheck start. Even when you are on a wage order, it always is YOUR job to supervise the payments and make sure they get to the Trustee s office. - 15 -
WHAT IF MY FINANCES CHANGE? As long as you are in Chapter 13, you have a duty to let the Court and the Trustee know of any significant improvement in your financial situation. YOU MUST LET THE TRUSTEE KNOW IF: You must give notice of any change that significantly increases your income. If you suffer a decrease in your income, you should review the change with your attorney for advice on whether Chapter 13 continues to be appropriate for you. - 16 -
Some Notes On CLAIMS A Quick Review Your CREDITORS are the people and companies to whom you owe money. Creditors might include your mortgage company, your credit card companies, banks that loaned you money, etc. Listing Creditors When you first filed your bankruptcy, you had to list your creditors. That list is your schedule of debts. The creditors that you listed in your schedules receive notice of your Chapter 13 case. You have a legal obligation to disclose in your case ALL of your creditors, even if you want to pay them outside the case. If you owe money to a creditor and did not list the creditor in your schedules, you need immediately to tell your attorney. What is a Claim? "CLAIM" is short for "PROOF OF CLAIM." Once your creditors get notice of your bankruptcy, they should file a claim with the court. The claim is a short document that describes the type and amount of your debt to the creditor. Most creditors have 90 days after the First Meeting of Creditors to file their claims with the Bankruptcy Court (government agencies have more time). - 17 -
Checking Claims You and your attorney should review the claims filed in your case after the deadline for filing claims has passed. Look for: (1) Creditors who have not filed. The Trustee's office can not make payments to a creditor unless it has a claim filed at Court (2) Incorrect amounts. The Trustee's office must pay each creditor the amount that it lists in the claim. If you disagree with an amount listed in a claim then you must work with your attorney to file an objection with the Bankruptcy Court. The Cardinal Rule of Claims The claim that the creditor filed at Court RULES. Filed claims are considered to be valid unless someone files an objection with the Court, and the Court enters an order changing the claim. If you disagree with a claim DO NOT call the Trustee's office - it is not in our power to change or disregard a filed proof of claim! You must have the creditor amend or withdraw the claim OR you must work with your attorney to object to the claim. - 18 -
Claim Totals Frequently, creditors file claims in amounts that are different from the amounts you expected when the case was filed. If claims come in significantly higher than expected, it may be necessary to "modify" or change your plan to provide enough money for all of them. There are two types of payments under Chapter 13: (1) Pre-Petition - payments to a creditor that came due BEFORE you filed Chapter 13. (2) Post-Petition - payments that come due AFTER you file bankruptcy. Generally, your Chapter 13 plan only takes care of the creditors to whom you owed money at the time you filed your case (pre-petition debts). You must continue to pay directly your post-petition bills for the following: - 19 -
In most cases, you must be sure to make the regular monthly payments that come due post-petition on all your secured debts, such as your mortgage and your car loan. Make sure you understand from your attorney which of your secured creditors you need to pay. Resume the payments immediately after your petition is filed. - 20 -
Chapter 13 & Your House Many people file Chapter 13 bankruptcy in order to protect their houses. To make sure that your house is protected under your plan: (1) pay ALL post-petition mortgage payments on time, and (2) make ALL your Chapter 13 plan payments on time and in full. Sometimes, even with the help of Chapter 13, people find out that they can not make their post-petition house payments. If this is true for you, then you should talk with your attorney as soon as possible about your options. If you do get behind on your post-petition house payments, it is likely that your mortgage company will request permission of the Bankruptcy Court to foreclose on your house. Any document concerning a post-petition default that you receive (usually called a motion for relief from stay ) needs your prompt attention ~ you need to stay in close touch with your attorney to see whether you can resolve the motion with the creditor. If your house is foreclosed on, your Chapter 13 plan IS NOT automatically over. You must talk with your attorney about the best way to resolve your case. -21
More about Chapter 13 & your house As long as your Chapter 13 case is pending, your assets, including your house, remain subject to the jurisdiction of the Bankruptcy Court. You may not sell your house or any other asset unless the Bankruptcy Court first authorizes you to do so. You also may not encumber an asset with a post-petition lien without the approval of the Court. This means that you must obtain the Court s permission to refinance the existing mortgage on your home or any other real property that you own. The Trustee cannot give you this permission. In order to obtain Court approval to sell an asset or to refinance an existing loan, the appropriate motion must be filed with the Court. The motion must provide certain specific information so that the Trustee and creditors can properly evaluate the proposal. We strongly encourage you to work with your attorney if you expect to sell your home or refinance your mortgage. When scheduling a settlement, you need to allow sufficient time usually 45 to 60 days for the motion to move through the Court. Please contact our office for further information if you determine during your Chapter 13 case to sell your home (or any other asset) or to refinance a mortgage loan. -22-
HOW THE TRUSTEE'S OFFICE PAYS OUT You may be interested to know that: The Trustee distributes over $1 million each month to creditors, attorneys, and debtors. ABOUT THE "CLOSE OUT" PROCESS Because of the large number of payments sent out by the Trustee's office, all checks are calculated and prepared by computer. This process is called "close out." Close out is usually on the last day of each month. After checks are printed during close out, it takes several more business days to get checks separated, signed and ready for mailing. It takes longest to mail debtor refunds because the refund checks can not be mailed until all the final reports are printed and reviewed. Therefore... If the Trustee's office receives an order dismissing or converting your case, any refund due you will not be mailed out until the following month. REMEMBER: It is important if you move to send your new address to the Trustee so we can get any refund returned to you without delay! - 23 -
CHECK YOUR MAILBOX... For your SEMI-ANNUAL REPORT Every six months (in April and October), the Trustee's office will mail you a report that gives important information about your Chapter 13 case. This is called a semi-annual report. It is an important tool for monitoring the progress of your case. Make sure that you read and understand each report. Look especially at the following: PAYMENTS: is each payment made for your case within the prior six months listed in the report? Is there a payment listed which does NOT belong to your case? NOTE THAT each report itemizes the individual payments received during only the preceding six (6) months. Payments received more than six months before the report date, and which were itemized in earlier reports, will not be itemized again. We recommend that you keep all your semi-annual reports in a safe place. CLAIMS: do all the claims shown as filed in your case properly belong there? Are they being paid the way your plan directs? Is any claim that you expected to be paid in your case missing from the report? If so, you should ask your attorney to check whether the creditor filed a claim with the Court. It is important to call your attorney if you have any questions or concerns about the information in your report. (Your attorney also receives a copy of the report). By reviewing the report together, you and your attorney can make sure that your case is paying creditors the way that your plan intends for them to be paid. - 24 -
Making Your Chapter 13 Work: A Quick Review.... Good Luck!! -25-