IMPORTANT INFORMATION AND FAQ's FOR CLIENTS ENTERING THE CHAPTER 13 PROCESS
When do I make my first trustee payment?
Your first trustee payment is due 30 days from the day your case is filed. You will not receive a statement although you should receive a “welcome” packet from the trustee’s office. Your case has been carefully configured to allow you to leave the bankruptcy process by a particular date2. Missing payments obscures that date, but most importantly, missing or skipping payments places your case in great jeopardy of being dismissed. Payments should be made to Chapter 13 Trustee – Maine. The trustee’s address for payment purposes is:
Chapter 13 Trustee - Maine
P.O. Box C
Brunswick, ME 04011
I have an issue with my case, should I call the trustee’s office?
Generally, the answer to this question is no. On rare occasions it makes sense for clients to contact the trustee directly, but as general rule, you should always contact us before calling the trustee. Remember, we represent you. We are typically in the best position to get your questions answered.
If I am retaining my home or leased vehicle, should I still make a mortgage/automobile lease payment even if I don’t receive a payment coupon or statement?
Yes. You should send the regular mortgage/automobile lease payment to your mortgage/finance company every month by its due date (it is wise to keep copies of your payments to help if payments are ever questioned by the court, trustee or mortgage/finance company). Saying you didn’t get a bill will not serve as a defense. Skipping or missing monthly mortgage/lease payments can place your case in jeopardy as you will need to get caught up if you miss payments in the bankruptcy. Sometimes we are able to add these payments to your plan but this is dangerous as it increases your monthly trustee payment and may make your plan unfeasible. Assessing your ability to do this is done on a case by case basis – please don’t try to do this yourself. Missing mortgage/lease payments may be cause for your mortgage/finance company to ask the court for permission to start foreclosure/repossession proceedings (known as Motions for Relief from Stay). Please keep up to date on your payments and let us know if you miss one.
Can I get an extension to file my taxes?
No. Upon the filing of your case, the Court will order you to file your taxes on time. You must file your taxes every year you are in chapter 13 bankruptcy by April 15th. Extensions are not allowed. Please plan accordingly. We encourage you to use a tax preparation service the first year you are in bankruptcy, particularly if you have had tax issues in the past. A tax preparer may be able to find additional tax savings for you, especially if you have always been the one to file your own taxes. Remember that refunds over $1200.00 for single filers and $2400.00 for joint filers are likely to be surrendered to the Trustee.
Why am I being billed for attorney’s fees?
You paid an upfront retainer to get your case started with our office. As explained at the time you initially met with us, your Chapter 13 requires lots of attention from our office staff and though you may not see it, a lot happens in your case behind the scenes. That said, at some point, we will exhaust the upfront retainer you paid our office. Part of your plan payment goes to pay for fees that we accrue while working for you. Periodically, our office will file an Application for Compensation with the court. This application is the process by which we are paid for the legal work we are doing on your case. The fees are paid from your plan payments and distributed to us by the trustee. You are not expected to pay the fees out of pocket but you are entitled to know when we are asking to paid. If you have questions about fees, please call our office.
I got a notice about a hearing, do I need to attend?
Generally, the only time you should have to appear in your case is at the Meeting of Creditors also known as the 341 Meeting. From time to time our clients are required to attend evidentiary hearings and other examinations, but this is not typical. You will, however, receive many court notices about your case. Unless we tell you you need to attend, you can assume that your attendance is unnecessary. Of course, you are welcome to attend the court hearings, but almost all of our clients opt to just allow us to represent them at these proceedings.
I am still getting calls and letters from creditors. What can I do?
Once your case is filed, you should not receive any communications from creditors. Please let our office know if you do receive calls or letters. Typically telling the creditor your bankruptcy filing number will stop all further efforts to contact you. You should feel free to disclose this number if you are contacted. As soon as your case is filed, the court assigns a case number so feel free to check back with us to get it right after the case is filed. The number also appears on all documents you receive regarding your case.
My husband and I aren’t getting along. Will our case be affected if we divorce?
Yes. Your case will be significantly affected if you file for a divorce. Joint filers must remain married for the duration of the chapter 13 bankruptcy. If you wish to divorce before your case is over, you will be allowed to do so, but the bankruptcy court must be notified and your case will need special attention. Our office’s ability to represent you both may also be compromised. Please keep our office informed if you and your spouse contemplate divorce.
I need to buy a new car, refinance my home or seek a home loan modification. Can I borrow money in bankruptcy?
You need special court permission to borrow money while your Chapter 13 case is active. This goes for any type of borrowing, including loan modifications. Please contact our office to learn what you need to do to borrow money. If you do seek a loan modification, please keep copies of all documents you submit to your lender. The trustee routinely asks for the documents submitted in the course of a loan modification. We highly encourage our clients to use the information we provide in the bankruptcy petition regarding income and monthly expenses as part of your loan modification application.
My utility company is charging me a huge deposit to keep my account open. Is there anything I can do?
If a utility company has been included in your bankruptcy because you owed an arrearage on an account, it is very likely that the company will charge you a deposit going forward in order to keep the account open. Typically, utility companies charge your two highest consecutive bills as a deposit and they require full payment of the deposit in 2-3 months. This may mean that you need to adjust your expenses in the first few months of bankruptcy to be able to afford the deposit.
I am self-employed, do I have any additional obligations to the trustee?
If you are self-employed, you are required to supply the trustee with monthly business reports. Please send your monthly profit and loss documents to our office so we can forward them on to the trustee. If you haven’t been keeping these documents, please get in the habit of doing so now. The trustee will be looking for them and you are required to furnish them. Getting in the habit of keeping your books on programs like QuickBooks is a great idea and facilitates the reporting aspect of your case.
I want to sell my car or valuable property. Do I need to do anything in my bankruptcy?
Yes, you need court permission to sell property like houses and cars. Please contact our office for information about how to do this.
I got a letter from your office with documents to sign. Can I just return them the next time I am at the office?
If our office sent you documents to sign, it usually means we are under a deadline to get the documents back to the Court. Please be prompt about getting signed documents back to our office. Failure to do this could be detrimental to your case and even result in a dismissal of your bankruptcy case. Please treat all correspondence from our office with the highest priority.
- Will my plan payment ever change?
Your plan payment at the beginning of the case is only a proposal based on our best guess about what you will need to pay while in Chapter 13. That said, it is very possible that your plan payment could increase – plan payments almost never decrease. One of the things that affects plan payment amounts are how certain we were able to be about what you owed on past payments to mortgage companies and payoffs for cars. The treatment of creditors also plays a role in this. Sometimes it appears that creditors are unsecured (deserving the lowest priority) but turn out to have a security interest. In order to keep the collateral, it is necessary to pay the debt in full. Sometimes your income will increase to a level that requires you to commit more money to the trustee on a monthly basis. Many different things affect plan payments, especially missed trustee and mortgage payments during the case. Attorneys’ fees may also impact your future plan payments. If your case requires a lot of work that was not anticipated initially, your plan may need to be increased to pay for the work our office has done on your case. This change may not occur until later in your case after we have exhausted what was originally projected for your case. Your initial payment amount will not be final until several months into the case and even then your circumstances may require the payment to change after the case has been confirmed by the court. Bankruptcy is not an exact science. Many different facts contribute to the plan and how it plays itself out. Be open to change, especially in the first few months of bankruptcy. Approaching your case with an open mind usually yields the best results.
In order to succeed in my case, I need a modification of my mortgage (loan modification). Will Molleur Law be handling that for me?
No. If you need a modification of home mortgage, you will be responsible for following up with your lender about this. A formal application will need to be submitted to your mortgage company and you will need to follow-up about your request on a regular basis. Please be sure to provide our office with a copy of your application as well as anything that you submit in support of your application. Lenders likely won’t communicate directly with you once you are in bankruptcy, but our office will be happy to provide you with a letter indicating that it is appropriate for them to talk with you about loan modification options. It is imperative that you follow up with your lender every 7-10 daysabout the status of your application. Your failure to do this could result in a loan modification denial or an incomplete application that never gets processed. While our office will monitor your progress, we will not seek the modification for you. If you are behind on your mortgage at the beginning of the case and cannot get a loan modification within 9 months of filing your bankruptcy, you will be required to pay any outstanding arrears on your mortgage through your Chapter 13 plan. This could make your plan very expensive and result in your need to surrender the property. Please work diligently on your loan modification – our representation of you in bankruptcy does include loan modification work. Clients from time to time opt to hire Molleur Law to handle their loan modifications for them. You may opt to do this but you should ask for this service and understand that you will be charged for these services which could increase your Chapter 13 payment. If you hire Molleur Law for this service, a separate agreement will be drafted. Please do not assume we are handling this for you.
Once in bankruptcy, am I guaranteed to get a loan modification?
No. Just because you are in bankruptcy doesn’t mean that your mortgage lender will approve you for a loan modification. You will still need to submit a complete application and comport with the lender’s requirements in order to be offered such an option. Even if you do submit a complete application, there is no guarantee that you will be eligible to receive a modification.
What if I get an inheritance, win the lottery, or someone leaves me life insurance money while my case is ongoing?
If you receive an inheritance, win the lottery, or receive a life insurance benefit during your case, you will be required to remit the proceeds (after any applicable taxes are set aside) to the Trustee who will use the money to increase the overall payment to your unsecured creditors. There is no way to protect these types of monies if received during your case but you will never be required to pay more than you owe. You have an obligation to immediately contact Molleur Law to let us know about these circumstances. The Bankruptcy Code requires us to notify the trustee within 14 days of discovery of an inheritance, lottery win or life insurance payout. Please help us represent you by always notifying us when these things happen. It will be important to evaluate your case in the event something like this happens.
The Trustee’s welcome letter indicates that I have to have my payments made through my employer, is that true?
No. The Trustee’s letter indicates that payments are required through your employer but the trustee will give you an opportunity to make your monthly payments yourself. If you stop making payments or if you pay by check that later bounces, the Trustee will require what is called a payroll order. A payroll order requires your employer to directly remit your payment through its payroll service. This can be embarrassing for people, especially if you are trying to keep your bankruptcy status private. If you do not want to have your payments required by payroll order, please make your payments on time, in full, and with good checks.
1 Occasionally we are not able to file your case because of missing information or other considerations. You will know, however, if this situation applies to you.
2 You must complete your bankruptcy in no more than sixty (months).