Virginia Beach Bankruptcy Lawyer

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Frequently Asked Questions About Chapter 13 Bankruptcy

When I have made all of my chapter 13 payments, what do I need to do before my case is closed?

After you have made all of your payments to the chapter 13 bankruptcy trustee:

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When do I have to make my first chapter 13 bankruptcy payment?

Your payment must be received in full within 30 days of the filing of your original Bankruptcy petition with the Bankruptcy Court. The trustee in your case is required to report to the Bankruptcy Court your failure to commence your payment on time. The Court will then enter an order dismissing your case. Payment must be received by the chapter 13 bankruptcy trustee. You do not make your payment to your bankruptcy attorney’s office!

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What is the payment address of my chapter 13 bankruptcy trustee?

There are two chapter 13 bankruptcy trustees for bankruptcies filed in the Norfolk Division or Newport News Division of the Eastern District of the United States Bankruptcy Court:

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What is a chapter 13 bankruptcy?

Chapter 13 is one method under the Bankruptcy Code to obtain relief from your creditors while at the same time providing a fair means to pay them back as much as you can. It allows you to keep some or all of your property during the time you are paying your creditors back and it permits you to modify some contract payments and interest rates. Your chapter 13 plan can eliminate certain late charges and penalties and allows you to extend payments on some of your debts. chapter 13 has gained widespread acceptance across the country as an attractive alternative to chapter 7 bankruptcy.

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What if my creditors still call me after filing chapter 13 bankruptcy?

When a creditor has had its claim paid by chapter 13, whether partially or in full, the creditor should and usually does send the “paid in full” papers to you. Even if the creditor fails to do this, it is not too significant since the official records of the Court showing that your plan is completely paid and that you received a discharge would overrule any claim for additional money. Should you receive any request for additional money after your plan is completed, do not pay without first talking to our office.

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What if my creditors continue to contact me after filing for chapter 13 bankruptcy protection?

All the creditors that you listed on your chapter 13 bankruptcy petition are subject to an order for relief which prohibits them from contacting you in any way. You will hear this referred to as the “Automatic Stay”. If you get notices in the mail from your creditors, send them a copy of your original filing notice and contact our office for further instructions. If you get personal direct contact from a creditor, such as a telephone call, a personal letter, a summons or a visit in person, immediately inform them that you are in a chapter 13 bankruptcy, give them your case number and refer them to our office for further communication. Under no circumstances should you discuss the debt with them in any manner.

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What if I fail to make my chapter 13 bankruptcy payments?

If you fail to make the payments to the chapter 13 trustee as required by your bankruptcy plan, the bankruptcy trustee may ask the court to dismiss your case. It is very important to contact our office if you ever expect to miss a payment for any reason so we can discuss all of your options. If your case is dismissed you might not be eligible for any other kind of bankruptcy relief fro six months and refiling may not provide the same benefits. It is very important to speak with our office if you know of any reason why the trustee would not receive a payment as scheduled. Remember, the trustee’s office does not have the authority to allow you to miss a payment or to pay less than your chapter 13 plan requires. Only the court can make that decision.

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What if I don't file my tax returns?

In order to be entitled to bankruptcy relief, you must have filed the previous four years tax returns and tax returns during the life of your bankruptcy. Failure to file tax returns is cause for dismissal of your case. If you have not filed all tax returns due by the date of your first Meeting of Creditors, the trustee cannot determine the appropriateness, or “feasibility” of your plan. Therefore, you plan cannot go forward. If you have filed under chapter 13 and have not filed your tax returns, the trustee may ask the Court to dismiss your case.

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What if I am temporarily unable to make my chapter 13 bankruptcy payment?

If you are temporarily out of work, injured or otherwise unable to make your chapter 13 plan payments, contact our office immediately to discuss all of your options. In many cases, the court may enter an order suspending your payments for a certain amount of time allowing you to resume the payments later so your case can continue.

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What happens to my credit rating when I file chapter 13 bankruptcy?

Your credit during and after completion of your chapter 13 plan will be, as it is now and was in the past, which is the personal opinion of any lender who looks at your credit record. A credit rating is is a record of your past credit performances. This record is made available to a creditor and that creditor decides by its own standards whether or not it will grant credit to you. Lawsuits, collections, attachments, garnishments, foreclosures, chapter 7 and chapter 13 bankruptcies are indications of credit problems. After many years and thousands of fully paid chapter 13 cases in this area, our office and the chapter 13 trustees have found a good many knowledgeable lenders looking favorably upon those who have paid their debts according to a chapter 13 plan. Any credit record that has been blemished by a payment problem must be gradually rebuilt. chapter 13 is a good place to start and is certainly preferable to judgments, garnishments, repossessions, foreclosures, etc.

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What happens after bankruptcy?

Bankruptcy is designed to help, not hurt, the people who file bankruptcy. People considering bankruptcy may be hopelessly in debt and bankruptcy may be the only option to resolve a frustrating, stressful financial situation. Most people feel an immediate sense of relief after beginning the bankruptcy process. Simply meeting with a bankruptcy attorney to discuss options makes most people feel better right away. Our offices have had many clients tell about how they have been avoiding the bankruptcy issue for as long as they could and they are so thankful they are now going to get something done about it.

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What else should I know about making my chapter 13 bankruptcy payments?

Most chapter 13 payments are made through a payroll deduction at your place of employment. Your chapter 13 plan payment can also be made by electronic transfer from your bank account. Only in unusual circumstances will the Court allow plan payments to be made in any other manner. Should you make a plan payment personally, you should do so by money order or cashier’s check. Be sure to include your name, address and your chapter 13 case number on the front of your payment to ensure proper credit. Payment of your chapter 13 bankruptcy plan payment by personal check is discouraged by the bankruptcy trustees and cash payments cannot be accepted.

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What does my bankruptcy attorney do in a chapter 13 bankruptcy?

Under the rules of the Bankruptcy Court, your attorney must continue to appear and represent you for as long as your case is active or until the judge permits your bankruptcy attorney to withdraw from your case. If you ever have a question concerning your bankruptcy case, a creditor, your rights or your options in bankruptcy, you should make it a rule to ask your attorney first. Be sure that you and your attorney have discussed fully whether additional legal services during your plan will cost you more money or whether the initial fee will cover all legal services. Keep in mind that all legal fees are monitored and regulated by the Bankruptcy Court and its officers. If at any time during your bankruptcy you wish to obtain a new attorney, an Order must be entered by the court appointing a new attorney and relieving your prior attorney.

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What are my responsibilities in a chapter 13 bankruptcy?

In a chapter 13 bankruptcy, you must cooperate with the court and the chapter 13 trustee. You must also:

  • Make all of your chapter 13 bankruptcy plan payments as they become due.
  • Make all of your domestic support payments while you are in chapter 13 bankruptcy.
  • You will be required to verify that your support payments are current before your chapter 13 bankruptcy plan can be confirmed (approved by the court).
  • You will be required to verify that you have made all of your support payments in order to receive your discharge.
  • You must certify that you have completed a course in financial management before you receive your discharge.

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How will I know who is receiving money from chapter 13 payments?

Most people are very interested in knowing how much they owe to their creditors and how much they have left to pay on their chapter 13 bankruptcy plan. If you want to find out how much each creditor is owed and what your payoff balance is on your chapter 13 plan, review your six month reports or write to the chapter 13 trustee’s office and request a “Debtor Printout”. The trustee’s office will only send you such a printout twice a year. The “Debtor Printout” will list the payoff balance to each of your creditors and of your chapter 13 plan. It will not include any un-matured interest which your plan requires you to pay, nor does it calculate the actual percentage unsecured creditors will be paid. It is only an approximate figure. Any request for the amount required to pay off your plan in full must be in writing to the trustee’s office.

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Do I have to stay in chapter 13?

Federal Bankruptcy law allows you to request that your chapter 13 bankruptcy case be dismissed at any time. No one can force you to remain under a chapter 13 plan if you do not wish to remain. If you desire to stop your case, contact our office immediately. In many cases, converting to a chapter 7 bankruptcy case may benefit you rather than an outright dismissal of your chapter 13 case. You should understand that a voluntary dismissal of your case will reactivate all unpaid or disputed debts, all interest, finance charges, late charges and all claims of your creditors on their terms.

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Can taxes be discharged in bankruptcy?

Many of our clients have asked if tax debts can be wiped out (discharged) in a bankruptcy case. Generally, income tax debts that were due more than three years before the filing of your bankruptcy case can be discharged in a bankruptcy if a return for the year the taxes were owed was filed more than two years before the filing date of the case. There are exceptions to this rule regarding a number of factors including whether or not a tax lien has been filed by the taxing authority.

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Can I sell my property during my chapter 13 bankruptcy?

You cannot dispose of any of your property, including land, without court approval while you are under chapter 13. If you want to sell property, trade in or sell a car, sell or refinance your home or modify your mortgage you must get court approval. If it is in your best interest, our office will prepare the necessary pleadings to file with the court to get permission to complete the process. If there are complications, the process could take a month or more.

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Can I buy a house, car or anything on credit during my chapter 13 bankruptcy?

Yes, you can buy a house or car while in a chapter 13, however, when your plan is confirmed, you should not incur any debt for as long as you are under chapter 13. If for some reason you feel it is important to buy something in installments or to be able to borrow money, you must first obtain the Court’s permission to do so. If it is in your best interest, our office will prepare the necessary pleadings to file with the court to get permission to obtain the financing. If there are complications, the process could take a month or more.

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Are my co-signors protected by my chapter 13 bankruptcy?

A co-signor, co-debtor, or guarantor on any of your consumer debts is generally protected from contact by the creditor by something called the “Co-debtor Stay”. This automatic protection applies only in chapter 13 cases. If the co-debtor has given collateral for the loan, the creditor must request a hearing before the Bankruptcy Judge in order to proceed against the property. The co-debtor stay will only protect co-signors, co-makers or guarantors up to the amount of debt your plan proposes to pay to the creditor. If your plan is not scheduled to pay the cosigned debt in full, a creditor may obtain permission from the court to collect from the co-debtor that portion of the debt your plan is not going to pay.

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