Facts About Chapter 13

Michigan Chapter 13 Lawyer

NOTE: This information is offered to provide general information only. It is not intended as legal advice. To find out about your particular situation, please contact us for a FREE office consultation. Call 734-237-1523 today.

Facts About Chapter 13

  1. What is Chapter 13 and how does it work?
  2. How does Chapter 13 differ from Chapter 7 for a debtor?
  3. When is Chapter 13 preferable to Chapter 7 for a debtor?
  4. How does Chapter 13 differ from a private debt consolidation service?
  5. What is a Chapter 13 discharge?
  6. Who is eligible for a Chapter 13 discharge?
  7. What types of debts are dischargeable under Chapter 13?
  8. What is a Chapter 13 plan?
  9. What is a Chapter 13 trustee?
  10. What debts may be paid under a Chapter 13 plan?
  11. Must all debts be paid in full under a Chapter 13 plan?
  12. Must all unsecured creditors be treated alike under a Chapter 13 plan?
  13. How much of a debtor's income must be paid to Chapter 13 trustee under a Chapter 13 plan?
  14. When must the debtor begin making payments to the Chapter 13 trustee under a Chapter 13 plan?
  15. How long does a Chapter 13 plan last?
  16. Is it necessary for all creditors to approve a Chapter 13 plan?
  17. How are secured creditors dealt with under Chapter 13?
  18. Can a Chapter 13 debtor shed or strip away a second or third mortgage lien (sometimes referred to as an equity mortgage) on a residence and still retain the residence?
  19. What happens to the second or third mortgage claims if shed or stripped away from the residence?
  20. How are cosigned or guaranteed debts handled under Chapter 13?
  21. Who is eligible to file under Chapter 13?
  22. May a husband and wife file jointly under Chapter 13?
  23. When should a husband and wife file jointly under Chapter 13?
  24. May a self-employed person file under Chapter 13?
  25. May a Chapter 7 case be converted to Chapter 13?
  26. Where is a Chapter 13 case filed?
  27. What fees are charged in a Chapter 13 case?
  28. Will a person lose any property if he or she files under Chapter 13?
  29. How does filing under Chapter 13 affect collection proceedings and foreclosures previously filed against the debtor?
  30. May a person whose debts are being administered by a financial counselor file under Chapter 13?
  31. How does filing under Chapter 13 affect a person's credit rating?
  32. Are the name of persons who file under Chapter 13 published?
  33. Is a person's employer notified when he or she files under Chapter 13?
  34. Does a person lose any legal rights by filing under Chapter 13?
  35. May employers or government agencies discriminate against persons who file under Chapter 13?
  36. What is required for court approval of a Chapter 13 plan?
  37. When does a debtor have to appear in court in a Chapter 13 plan?
  38. What if the court does not approve a debtor's Chapter 13 plan?
  39. How are the claims of unsecured creditors handled under Chapter 13?
  40. What if the debtor is temporarily unable to make the Chapter 13 payments?
  41. What if the debtor incurs new debts or needs credit during the Chapter 13 case?
  42. What should the debtor do if he or she moves while the case is pending?
  43. What if the debtor later decides to discontinue the Chapter 13 case?
  44. What happens if a debtor is unable to complete the Chapter 13 payments?
  45. Is a Chapter 13 debtor that receives a discharge required to pay taxes on the amount of debt forgiven?
  46. What is the role of the debtor's attorney in a Chapter 13 case?
  47. What fees may an attorney charge in a Chapter 13 case?

  1. What is Chapter 13 and how does it work?

    Chapter 13 is that part (or chapter) of the Bankruptcy Code under which a person may repay all or a portion of his/her debts under the supervision and protection of the bankruptcy court. The Bankruptcy Code is that portion of the federal law that deals with bankruptcy. A person who files under Chapter 13 is called a debtor. In a Chapter 13 case, the debtor must submit to the court a plan for the repayment of all or a portion of his or her debts. The plan must be approved by the court. If the court approves the debtor's plan, most creditors will be prohibited from collecting their claims from the debtor during the course of the case. The debtor must make regular payments to a person called the Chapter 13 trustee, who collects the money paid by the debtor and disburses it to creditors in the manner called for in the plan. Upon completion of the payments called for in the plan, the debtor is released from liability for the remainder of his/her dischargeable debts.

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  2. How does Chapter 13 differ from Chapter 7 for a debtor?

    The basic difference between Chapter 7 and Chapter 13 is that under Chapter 7 the debtor's nonexempt property (if any exists) is liquidated (sold and turned into cash) to pay as much as possible of the debtor's debts. While under Chapter 13, a portion of the debtor's future income is used to pay as much of the debtor's debts as is feasible considering the debtor's circumstances. As a practical matter, under Chapter 7 the debtor loses all or most of his or her nonexempt property and receives a Chapter 7 discharge, which releases the debtor from liability for most debts. Under Chapter 13, the debtor usually retains his or her nonexempt property and must pay off as much of his or her debts as the court deems feasible. A Chapter 13 case normally lasts much longer than a Chapter 7 case and requires payments by the debtor.

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  3. When is Chapter 13 preferable to Chapter 7 for a debtor?

    Chapter 13 is usually preferable for a person who:

    1. Wishes to repay all or most of his or her unsecured debts and has the income with which to do so within a reasonable time
    2. Has valuable nonexempt property or has valuable exempt property securing debts, either of which would be lost in a Chapter 7 case,
    3. Is not eligible for a discharge under Chapter 7
    4. Has one or more substantial debts that are dischargeable under Chapter 13 but not under Chapter 7
    5. Has sufficient assets with which to repay most debts, but needs temporary relief from creditors to do so

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  4. How does Chapter 13 differ from a private debt consolidation service?

    In a Chapter 13 case, the bankruptcy court can provide aid to the debtor that private debt consolidation services cannot provide. For example, the court has the authority to: prohibit creditors from attaching or foreclosing on the debtor's property; to force unsecured creditors to accept a Chapter 13 plan that pays only a portion of their claims (and in most cases no interest); and to discharge a debtor from unpaid portions of debts. Private debt consolidation services have none of these powers.

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  5. What is a Chapter 13 discharge?

    It is a court order releasing a debtor from all dischargeable debts and ordering creditors not to collect them from the debtor. A debt that is discharged is one that the debtor is released from and does not have to pay. There are two types of Chapter 13 discharges:

    1. A full or successful plan discharge, which is granted to a debtor who completes all payments called for in the plan
    2. A partial or unsuccessful plan discharge, which is granted to a debtor who is unable to complete the payments called for in the plan due to circumstances for which the debtor should not be held accountable

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  6. Who is eligible for a Chapter 13 discharge?

    The court may grant a discharge of debts if the debtor:

    1. Has not filed a Chapter 7 bankruptcy during the four-year period prior to the filing of the Chapter 13
    2. Has not filed a Chapter 13 bankruptcy during the two-year period prior to the filing of a Chapter 13
    3. Has obtained and filed with the court a certificate of personal financial management (commonly called a debtor education certificate) approved by the U.S. Trustee's Office prior to the closing of the bankruptcy case

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  7. What types of debts are dischargeable under Chapter 13?

    A full Chapter 13 discharge granted upon the completion of all payments required in the plan discharges a debtor from all debts except:

    1. Debts that were paid outside of the plan and not covered in the plan
    2. Installment debts whose last payment is due after the completion of the plan
    3. Debts incurred while the plan was in effect that were not paid under the plan
    4. Secured debts (i.e. debts secured by mortgages or liens)
    5. Debts that were paid outside of the plan and not covered in the plan
    6. Installment debts whose last payment is due after the completion of the plan
    7. Debts for alimony, maintenance or support
    8. Debts for death or personal injury caused by the debtor's operation of a motor vehicle while unlawfully intoxicated
    9. Debts for restitution included in a criminal sentence imposed on the debtor
    10. Debts for educational benefits and student loans, unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his/her dependents
    11. Debts incurred using false pretenses, a false representation or actual fraud
    12. Debts that are not dischargeable under Chapter 7

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  8. What is a Chapter 13 plan?

    It is a written plan presented to the bankruptcy court by a debtor that states how much money or other property the debtor will pay to the Chapter 13 trustee, how long the debtor's payments to the Chapter 13 trustee will continue, how much will be paid to each of the debtor's creditors, which creditors will be paid directly by the debtor, and certain other technical matters.

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  9. What is a Chapter 13 trustee?

    A Chapter 13 trustee is a person appointed by the United States trustee to collect payments from the debtor, make payments to creditors in the manner set forth in the debtor's plan, and administer the debtor's Chapter 13 case until it is closed. In some cases, the Chapter 13 trustee is required to perform certain other duties, and the debtor is always required to cooperate with the Chapter 13 trustee.

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  10. What debts may be paid under a Chapter 13 plan?

    Any debts whatsoever, whether they are secured or unsecured. Even debts that are nondischargeable, such as debts for student loans, alimony or child support, may be paid under a Chapter 13 plan. However, the debtor may not be protected by the bankruptcy court for debts related to alimony or child support.

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  11. Must all debts be paid in full under a Chapter 13 plan?

    No. While certain debts, such as debts for taxes and fully secured debts, must be paid in full under a Chapter 13 plan (unless the creditor agrees to less payment), only an amount that the debtor can reasonably afford must be paid on most debts. The unpaid balances of most debts that are not paid in full under a Chapter 13 plan are discharged upon completion of the plan.

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  12. Must all unsecured creditors be treated alike under a Chapter 13 plan?

    No. If there is a reasonable basis for doing so, unsecured debts can be divided into separate classes and treated differently. It may be possible, therefore, to pay certain unsecured creditors in full, while paying little or nothing to others.

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  13. How much of a debtor's income must be paid to Chapter 13 trustee under a Chapter 13 plan?

    Usually, all of the disposable income of the debtor and the debtor's spouse for a three- to five-year period must be paid to the Chapter 13 trustee. Disposable income maybe determined by two methods:

    1. Income received by the debtor or his/her spouse that is not reasonably necessary for the support of the debtor and the debtor's dependents
    2. Income ending with the last day of the calendar month minus expenses as provided by the IRS regulations and certain other expenses as provided for in the Bankruptcy Code

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  14. When must the debtor begin making payments to the Chapter 13 trustee under a Chapter 13 plan?

    The debtor must begin making payments to the Chapter 13 trustee within 30 days after the commencement of the debtor's case. The plan must be filed with the court within 15 days after the case is filed. The payments must be made regularly, usually on a weekly, bi-weekly, semi-monthly or monthly basis. If the debtor is employed, most courts require the payments to be made by the debtor's employer; otherwise, the payments can be made by either the debtor or the debtor's employer.

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  15. How long does a Chapter 13 plan last?

    A Chapter 13 plan typically lasts for three to five years unless all debts can be paid in full sooner.

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  16. Is it necessary for all creditors to approve a Chapter 13 plan?

    No. To become effective, a Chapter 13 plan must be approved by the court, not by the creditors. The court, however, cannot approve a plan unless secured creditors are dealt with in the manner described in the answer to Question 16. Also, unsecured creditors are permitted to file objections to the debtor's plan, and these objections must be ruled on by the court before it can approve the debtor's Chapter 13 plan.

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  17. How are secured creditors treated under Chapter 13?

    There are four methods of dealing with secured creditors under Chapter 13:

    1. The creditor may accept the debtor's proposed plan
    2. The creditor may retain its lien and be paid the full amount of its secured claim under the plan
    3. The debtor may surrender the collateral to the creditor
    4. The creditor may be paid or dealt with outside the plan

    A debtor may not have to pay the full amount owed on: auto, household, furniture or jewelry loans that are subject to a lien. It is important to understand that a creditor has a secured claim only to the extent of the value of its security, which cannot exceed the value of the property securing the claim. However, there are two exceptions to this rule:

    1. The creditor of a motor vehicle, purchased by the debtor for the debtor's personal use, sold within the 910-day (2.5-year) period preceding the date of filing Chapter 13
    2. The creditor(s) of any collateral purchased by the debtor within a one-year period prior to filing Chapter 13

    Thus, a creditor with a lien on a $1,500 automobile cannot have a secured claim for more than $1,500, regardless of how much is owed to the creditor, if the debt is more than 910 days old at the time of filing. If the debtor is in default to a secured creditor, the default must be cured (made current) within a reasonable time. Also, interest must be paid on secured claims. But, the plan may provide for the debtor to pay less than the amount of interest the debtor previously agreed to on the original loan documents.

  18. Can a Chapter 13 debtor shed or strip away a second or third mortgage lien (sometimes referred to as an equity mortgage on a residence and still retain the residence?

    Debtors in a Chapter 13 case can shed or strip away a second or third mortgage in a Chapter 13 case if they can prove that the fair market value of their residence is less than the balance of their loan on the first mortgage. The subsequent mortgages can be stripped as their collateral would be without any value.

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  19. What happens to the second or third mortgage claims if shed or stripped away from the residence?

    The second or third mortgages would be treated as unsecured debts and receive a prorate dividend with other unsecured creditors. Upon completion of the Chapter 13 plan they would no longer have a lien against the residence.

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  20. How are cosigned or guaranteed debts handled under Chapter 13?

    If a cosigned or guaranteed consumer debt is being paid in full under a Chapter 13 plan, the creditor may not collect the debt from the co-signer or guarantor. However, if a consumer debt is not being paid in full under the plan, the creditor may collect the unpaid portion of the debt from the co-signer or guarantor. A consumer debt is a nonbusiness debt. Creditors may collect business debts from co-signers or guarantors even if the debts are to be paid in full under the debtor's plan. Personal income taxes are not consumer debts. Personal income taxes may be collected from the nonfiling spouse.

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  21. Who is eligible to file under Chapter 13?

    Any person may file under Chapter 13 if the person:

    1. Resides in, does business in or owns property in the United States
    2. Has regular income
    3. Has unsecured debts of less than $336,900
    4. Has secured debts of less than $1,010,650
    5. Is not a stockbroker or a commodity broker
    6. Has not been a debtor in another bankruptcy case that was dismissed within the last 180 days on certain technical grounds
    7. Has completed a budget analysis, and obtained credit counseling from an approved nonprofit counseling agency during the 180-day period preceding the date of filing and filed the same upon the commencement of the case

    A person meeting the above requirements may file under Chapter 13 regardless of when he or she last filed a bankruptcy case or received a bankruptcy discharge.

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  22. May a husband and wife file jointly under Chapter 13?

    A husband and wife may file jointly under Chapter 13 if each of them meets the requirements listed in the answer to Question 18 above. Only one of them need have regular income and their combined debts must meet the debt limitations.

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  23. When should a husband and wife file jointly under Chapter 13?

    If both spouses are liable for any significant debts, they should file jointly under Chapter 13, even if only one of them has income. Also, if both of them have regular income, they should file jointly.

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  24. May a self-employed person file under Chapter 13?

    Yes. A self-employed person meeting the eligibility requirements listed in the answer to Question 18 above may file under Chapter 13. A debtor engaged in business may continue to operate the business during the Chapter 13 case.

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  25. May a Chapter 7 case be converted to Chapter 13?

    A pending Chapter 7 case may be converted to Chapter 13 at any time at the request of the debtor, if the case has not been previously converted to Chapter 7 from Chapter 13.

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  26. Where is a Chapter 13 case filed?

    A Chapter 13 case is filed in the bankruptcy court in the district where the debtor has lived or maintained a principal place of business for the greatest portion of the last 180 days. The bankruptcy court is a unit of the federal district court.

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  27. What fees are charged in a Chapter 13 case?

    There is a $274 filing fee charged when the case is filed, which may be paid in installments if necessary. In addition, the Chapter 13 trustee assesses a fee of approximately 5 percent (subject to change) on all payments made under the plan. Thus, if a debtor pays a total of $5,000 under a Chapter 13 plan, the total amount of fees charged in the case will be $524 (a $250 trustee's fee, plus the $274 filing fee). These fees are in addition to the fee charged by the debtor's attorney.

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  28. Will a person lose any property if he or she files under Chapter 13?

    Usually not. Under Chapter 13, creditors are usually paid out of the debtor's income and not from the debtor's property. However, if a debtor has valuable nonexempt property and has insufficient income to pay enough to creditors to satisfy the court, some of the debtor's property may have to be used to pay creditors.

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  29. How does filing under Chapter 13 affect collection proceedings and foreclosures previously filed against the debtor?

    The filing of a Chapter 13 case automatically stays (stops) all lawsuits, attachments, garnishments, foreclosures, harassment on the telephone and other actions by creditors against the debtor or the debtor's property. A few days after the case is filed, the court will mail a notice to all creditors advising them of the automatic stay. Certain creditors may be notified sooner, if necessary. Most creditors are prohibited from proceeding against the debtor during the entire course of the Chapter 13 case. If the debtor is later granted a Chapter 13 discharge, the creditors will then be prohibited from collecting the discharged debts from the debtor after the case is closed.

    A debtor who has previously filed a Chapter 13 case has an automatic stay for only 30 days after commencement of the case unless the court extends the automatic stay upon request of the debtor for good cause. A debtor who has had two prior bankruptcy cases pending within a year will not have the automatic stay unless the debtor successfully obtains a grant of automatic stay from the bankruptcy court for good cause.

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  30. May a person whose debts are being administered by a financial counselor file under Chapter 13?

    Yes. A financial counselor has no legal right to prevent a person from filing any type of bankruptcy case, including a Chapter 13 case. The approved credit counseling agency cannot prevent the debtor from filing any type of bankruptcy case. Their sole purpose is to provide a credit counseling payment option if possible.

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  31. How does filing under Chapter 13 affect a person's credit rating?

    It may improve it, in the long run. A person's debts are ultimately discharged by completing a Chapter 13 plan. A person who owes no debt improves his/her debt payment to income ratio upon which most lenders make their loan determinations.

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  32. Are the name of persons who file under Chapter 13 published?

    When a Chapter 13 case is filed, it becomes a public record and the name of the debtor may be published by some credit reporting agencies. However, newspapers do not usually publish the names of persons who file under Chapter 13 except in official legal newspapers not widely read by the public. (i.e. Detroit Legal News)

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  33. Is a person's employer notified when he or she files under Chapter 13?

    In most cases, yes. Many courts require a debtor's employer to make payments to the Chapter 13 trustee on the debtor's behalf. Also, the Chapter 13 trustee may contact an employer to verify the debtor's income. However, if there are compelling reasons for not informing an employer in a particular case, it may be possible to make other arrangements for the required information and payments.

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  34. Does a person lose any legal rights by filing under Chapter 13?

    No. Filing under Chapter 13 is a civil proceeding and not a criminal proceeding. Therefore, a person does not lose any legal or constitutional rights by filing a Chapter 13 case.

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  35. May employers or government agencies discriminate against persons who file under Chapter 13?

    No. It is illegal for either private or governmental employers to discriminate against a person as to employment because that person has filed under Chapter 13. It is also illegal for local, state or federal governmental agencies to discriminate against a person as to the granting of licenses, permits and similar grants because that person has filed under Chapter 13.

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  36. What is required for court approval of a Chapter 13 plan?

    The court may confirm a Chapter 13 plan if:

    1. The plan complies with the legal requirements of Chapter 13
    2. All required fees, charges and deposits have been paid
    3. The plan was proposed in good faith
    4. Each unsecured creditor will receive under the plan at least as much as it would have received had the debtor filed under Chapter 7
    5. It appears that the debtor will be able to make the required payments and comply with the plan
    6. Each secured creditor has been dealt with in the manner described in the answer to Question 16 above

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  37. When does a debtor have to appear in court in a Chapter 13 plan?

    Most debtors have to appear in court at least twice: once for a hearing called the meeting of creditors, and once for a hearing on the confirmation of the debtor's Chapter 13 plan. The meeting of creditors is usually held about a month after the case is filed. The debtor's testimony should not be lengthy at either hearing, however. If difficulties or unusual circumstances arise during the course of a case, additional court appearances may be necessary. The confirmation hearing will be held approximately three to four months after the filing of the case.

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  38. What if the court does not approve a debtor's Chapter 13 plan?

    If the court will not approve the plan proposed by a debtor, the debtor may amend the plan and seek court approval of the amended plan. If the court does not approve a plan, it will usually give its reasons for refusing to do so, and the plan may then be appropriately amended so as to become acceptable to the court. A debtor who does not wish to amend a proposed plan may either convert the case to Chapter 7 or dismiss the case.

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  39. How are the claims of unsecured creditors handled under Chapter 13?

    Unsecured creditors must file their claims with the bankruptcy court within 90 days after the first date set for the meeting of creditors in order for their claims to be allowed. Unsecured creditors who fail to file claims within that period may be barred from doing so, and upon completion of the plan their claims will be discharged. The debtor may file a claim on behalf of a creditor, if desired. After the claims have been filed, the debtor may file objections to any claims that he or she disputes. When the claims have been approved by the court, the Chapter 13 trustee begins paying unsecured creditors as provided for in the Chapter 13 plan. Payments to secured creditors and to special classes of unsecured creditors may begin earlier, if desired.

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  40. What if the debtor is temporarily unable to make the Chapter 13 payments?

    If the debtor is temporarily out of work, injured or otherwise unable to make the payments required under a Chapter 13 plan, the plan can usually be modified so as to enable the debtor to resume the payments when he or she is able to do so. If it appears that the debtor's inability to make the required payments will continue indefinitely or for an extended period, the case may be dismissed or converted to Chapter 7.

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  41. What if the debtor incurs new debts or needs credit during the Chapter 13 case?

    Only two types of credit obligations or debts incurred after the filing of the case may be included in a Chapter 13 plan. These are:

    1. Debts for taxes that become payable while the case is pending
    2. Consumer debts arising after the filing of the case that are for property or services necessary for the debtor's performance under the plan and that are approved in advance by the Chapter 13 trustee

    All other debts or credit obligations incurred after the case is filed must be paid by the debtor outside the plan. Most courts issue an order prohibiting the debtor from incurring new debts during the case unless they are approved in advance by the Chapter 13 trustee. The approval of the Chapter 13 trustee in your case must be obtained before incurring credit or new debt for more than $1,000 after the case has been filed. The incurrence of regular debts, such as debts for telephone services and utilities, do not require the trustee's approval.

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  42. What should the debtor do if he or she moves while the case is pending?

    The debtor, through his attorney, should immediately notify the bankruptcy court and the Chapter 13 trustee of the new address. Most communications in a Chapter 13 case are by mail. If the debtor fails to receive an order of the court or a notice from the Chapter 13 trustee, because of an incorrect address, the case may be dismissed.

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  43. What if the debtor later decides to discontinue the Chapter 13 case?

    The debtor has the right to either dismiss a Chapter 13 case or convert it to Chapter 7 at any time for any reason. However, if the debtor simply stops making the required Chapter 13 payments, the court may compel the debtor or the debtor's employer to make the payments. The debtor who wishes to discontinue a Chapter 13 case should do so through his or her attorney.

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  44. What happens if a debtor is unable to complete the Chapter 13 payments?

    A debtor who is unable to complete the Chapter 13 payments has three options:

    1. Dismiss the Chapter 13 case
    2. Convert the Chapter 13 case to Chapter 7
    3. If the debtor is unable to complete the payments due to circumstances for which he or she should not be held accountable, close the case and obtain a partial Chapter 13 discharge as described in the answer to Question 6 above

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  45. Is a Chapter 13 debtor who receives a discharge required to pay taxes on the amount of debt forgiven?

    No. Even though the IRS considers debt relief a taxable event, filing bankruptcy protects the debtor from having to claim the amount forgiven as income.

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  46. What is the role of the debtor's attorney in a Chapter 13 case?

    The debtor's attorney performs the following functions in a typical Chapter 13 case:

    1. Examining the debtor's financial situation and determining whether Chapter 13 is a feasible alternative for the debtor, and if so, whether a single or a joint case should be filed
    2. Assisting the debtor in the preparation of a budget
    3. Examining the liens or security interests of secured creditors to ascertain their validity or avoidability, and taking the legal steps necessary to protect the debtor's interest in such matters
    4. Devising and implementing methods of dealing with secured creditors
    5. Assisting the debtor in devising a Chapter 13 plan that meets the needs of the debtor and is acceptable to the court
    6. Preparing the necessary pleadings and Chapter 13 forms
    7. Filing the Chapter 13 forms and pleadings with the court and paying, or providing for the payment of, the filing fee
    8. Attending the meeting of creditors, the confirmation hearing and any other court hearings required in the case
    9. Assisting the debtor in obtaining court approval of a Chapter 13 plan
    10. Checking the claims filed in the case, filing objections to improperly claims, and attending court hearings thereon
    11. Assisting the debtor in overcoming any legal obstacles that may arise during the course of the case
    12. Assisting the debtor in obtaining a discharge upon the completion or termination of the plan
    13. Continuously representing the debtor in all matters relating to the debtor's case until otherwise allowed by the court to withdraw or there is a dismissal of the case.

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  47. What fees may an attorney charge in a Chapter 13 case?

    The fee charged by an attorney for representing a debtor in a Chapter 13 case must be reviewed and approved by the bankruptcy court. This rule is followed whether the fee is paid to the attorney prior to or after the filing of the case, and whether it is paid to the attorney directly by the debtor or by the Chapter 13 trustee. The court will approve only a fee that it finds to be reasonable.

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Glossary Of Terms

Secured creditor — A person or entity with a claim for money owed who has a right to repossess or foreclose collateral such as an auto loan with a lien on a title to a car or a bank with a mortgage on a home.

Unsecured creditor — A person or entity with a claim for money owed but is not secured.

Exempt property — An amount of property in which the debtor has a right to keep in order to make a fresh start in life after filing Chapter 7 Bankruptcy.

Nonexempt property — Property owned by the debtor which is greater than the amount the debtor is allowed to keep after filing Chapter 7 Bankruptcy.

Charles J. Schneider, P.C., is your personal bankruptcy firm serving Westland, Dearborn, Flint, Ann Arbor, Livonia, and the counties of Wayne, Oakland, Livingston, and Washtenaw in Michigan since 1977. Contact the firm today for a free consultation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.