General Frequently Asked Questions
1. Bankruptcy, Chapter 7 or
13?
Bankruptcy is a Federal Law
Provided to you designed to get you a fresh start free from
harassing creditor phone calls, lawsuits, repossessions and
garnishments. It is a privilege granted to you under the
United States Constitution. It is a very powerful law
because it forces your creditors to permanently wipe out
your debts (chapter 7) or to accept a repayment plan which
you have proposed (chapter 13).
2. Should I file for
Bankruptcy?
Financial problems lead to
great stress and can disrupt one's personal and family
relationships, yet many people are scared at the thought of
having to file for bankruptcy relief. This is exactly
what your creditors want you to think. They do not want you
to use your right under the law. They would much rather you
pay the minimum monthly payment for the rest of your life at
20 to 25% interest!!!!!
3. Will I lose my Property?
No, as long as you tell the
court what you own and what you think it's worth, the law
will allow you to keep your property as the basis for your
"fresh start" subject to certain limitations. The law is
very generous in allowing you to exempt your home equity,
automobiles, household goods and furnishings, clothing,
jewelry, bank accounts, stocks and bonds, pension and 401k
plans, etc. The most important thing to do is make an
accurate list of what you own and what you think it is worth
(at a garage sale or auction.)
4. Can I keep my house and
car?
Yes, you an file a bankruptcy
and keep your house and car provided you continue to make
payments to the finance or mortgage company.
5. Where are you located?
My office is located downtown
Detroit, at the corner of Griswold and Fort street in the
historic Penobscot Building, Suite 3156. (Click
here.)
6. I'm married, can I file
alone or must my spouse file jointly?
If your married the law
recognizes you as one entity and can file either together as
a couple (jointly) or either spouse (husband or wife) can
file on their own. The law does not require that both file.
7. Will filing Bankruptcy
mean I can't get credit for 7 years?
I have heard this wives' tale
so many times and cannot figure out where it came from.
Straight bankruptcy is called Chapter 7, maybe that is where
the seven years came from, but the truth is that many people
have a better chance of getting credit after they file
Bankruptcy. Bankruptcy is definitely a negative mark on a
credit report and can be reported for 10 years after filing
after which is must be removed. Most people who are
considering filing Bankruptcy however already have a
negative credit report due to non or late payments,
repossessions, charge offs or judgments. A bankruptcy which
wipes the slate clean will be an improvement. Keep in mind
that credit is not your friend, its what got you here in the
first place. Credit is the reason people end up filing for
bankruptcy. Credit equals Debt.
8. I can't live without my
MasterCard, what will I do?
Believe it or not, most
retail establishments still accept cash! (Yes, even hotel
rooms and car rental agencies). For most people credit cards
cause more harm than good. They lead to impulse buying and
mask the real pain of paying with cold hard cash or even
writing a check. Most of my past clients report to me that
they continue to be bombarded with new credit card offers
after filing bankruptcy. This is because the credit card
companies want to get you back into the game. RESIST at all
cost! Consider getting a debit card or a secured credit
card.
9. I'm current on all my
payments. I've never been late. Can I still file Bankruptcy?
I have many clients who look
good on paper and appear to be "making it" but realize that
the house of cards is about to come crashing down because
they have depleted their savings and the ability to transfer
balances or "Robbing Peter to pay Paul" just doesn't work
anymore. If after you pay your normal monthly living
expenses like rent or house payment, utilities, food,
clothing, transportation, recreation, insurance and medical
care, you don't have enough income left over to make even
the minimum monthly payment on your credit card or loan
debt, then you are already bankrupt! If you have used one
credit card to obtain a cash advance to pay another, the
writing is on the wall. Seek relief before you drown in
debt.
10. I'm an honest person and
want to pay my debts, I don't want to cheat my creditors?
First understand that
bankruptcy is not about cheating your creditors. Bankruptcy
laws are designed to provide a person facing financial
difficulty with relief from the stress and burden of debt to
allow that person (or family) a "fresh start" while at the
same time being fair to the creditors. Chapter 7 Bankruptcy
will discharge your "legal" obligation to pay your debts, it
will wipe them out. This means that the creditor can't call
you at home or at work to try to collect the debt, they
can't garnish your wages or seize money out of your bank
account. They must leave you alone permanently. After the
bankruptcy, if you win the lottery or come into some money
and wish to repay those creditors, you may do so of your own
free will. If you can afford to pay some amount to your
creditors right now, but just not as much as they want, the
law encourages you to file a Chapter 13 Bankruptcy in which
you make payments to your creditors through the Court for 3
to 5 years.
Top of Page
Chapter 7 Frequently Asked Questions
1. What is chapter 7 and how
does it work?
Chapter 7 is that part (or
chapter) of the Bankruptcy Code that deals with liquidation.
The Bankruptcy Code is that part of the federal laws that
deal with bankruptcy. A person who files under chapter 7 is
called a debtor. In a chapter 7 case, the debtor must turn
his or her nonexempt property, if any exists, over to a
trustee, who then converts the property to cash and pays the
debtor's creditors. In return, the debtor receives a chapter
7 discharge, if he or she pays the filing fee, is eligible
for such a discharge, and obeys the orders and rules of the
court.
2. What is a chapter 7
discharge?
It is a court order releasing
a debtor from all of his or her dischargeable debts and
ordering the creditors not to attempt 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. Some debts,
however, are not dischargeable under chapter 7, and some
persons are not eligible for a chapter 7 discharge.
3. What debts are not
dischargeable under chapter 7?
All debts of any kind or
amount, including out-of-state debts, are dischargeable
under chapter 7 except the debts listed below. The following
is a list of the most common debts that are not
dischargeable under chapter 7:
- Most tax debts and debts that were incurred to pay
federal tax debts.
- Debts for obtaining money, property, services, or
credit by means of false pretenses, fraud, or a false
financial statement if the creditor files a complaint in
the case (included here are debts for luxury goods or
services and debts for cash advances made within 60 days
before the case is filed).
- Debts not listed on the debtor's chapter 7 forms,
unless the creditor knew of the case in time to file a
claim.
- Debts for fraud, embezzlement, or larceny, if the
creditor files a complaint in the case.
- Debts for alimony, maintenance, or support and, if
the creditor files a complaint in the case, certain
other divorce-related debts including property
settlement debts.
- Debts for intentional or malicious injury to the
person or property of another, if the creditor files a
complaint in the lease.
- Debts for certain fines or penalties.
- Debts for educational benefits and student loans are
not dischargable unless a court finds that not
discharging the debt would impose an undue hardship on
the debtor and his or her dependents.
- Debts for personal injury or death caused by the
debtor's operation of a motor vehicle while intoxicated.
- Debts that were or could have been listed in a
previous bankruptcy case of the debtor in which the
debtor did not receive a discharge.
4. What persons are not
eligible for a chapter 7 discharge?
The following persons are not
eligible for a chapter 7 discharge:
- A person who has been granted a discharge in a
chapter 7 case filed within the last six years.
- A person who has been granted a discharge in a
chapter 13 case filed within the last six years, unless
70 percent or more of the unsecured claims were paid off
in the chapter 13 case.
- A person who files a waiver of discharge that is
approved by the court in the chapter 7 case.
- A person who conceals, transfers, or destroys his or
her property with the intent to defraud his or her
creditors or the trustee in the chapter 7 case.
- A person who conceals, destroys, or falsifies
records of his or her financial condition or business
transactions.
- A person who makes false statements or claims in the
chapter 7 case, or who withholds recorded information
from the trustee.
- A person who fails to satisfactorily explain any
loss or deficiency of his or her assets.
- A person who refuses to answer questions or obey
orders of the bankruptcy court, either in his or her
bankruptcy case or in the bankruptcy case of a relative,
business associate, or corporation with which he or she
is associated.
5. What persons are eligible
to file under chapter 7?
Any person who resides in,
does business in, or has property in the United States may
file under chapter 7, except a person who has been involved
in another bankruptcy case that was dismissed within the
last 180 days on certain grounds.
6. What persons should not
file under Chapter 7?
A person who is not eligible
for a chapter 7 discharge should not file under chapter 7.
Also, a person who has substantial debts that are not
dischargeable under chapter 7 should not file under chapter
7. In addition, it may not be wise for a person with current
income sufficient to repay a substantial portion of his or
her debts within a reasonable period to file under chapter
7, because the court may dismiss the case as constituting an
abuse of chapter 7. Although it is not a legal requirement,
some experts say that a chapter 7 case should not be filed
unless a person's dischargeable debts exceed the value of
his or her nonexempt assets by at least two thousand
dollars.
7. How much is the chapter 7
filing fee and when must it be paid?
The filing fee is $200 for
either a single or a joint case. If a debtor is unable to
pay the filing fee when the case is filed, it may be paid in
installments, with the final installment due within 120
days. The period for payment may later be extended to 180
days by the court, if there is a valid reason for doing so.
The entire filing fee must ultimately be paid, however, or
the case will be dismissed and the debtor will not receive a
discharge. The fee charged by the debtor's attorney for
handling the chapter 7 case is in addition to the filing
fee.
8. Where is a chapter 7 case
filed?
In the office of the clerk of
the bankruptcy court in the district where the debtor has
resided or maintained a principal place of business for the
greatest portion of the last 180 days. The bankruptcy court
is a federal court and is a unit of the United States
district court.
9. May a husband and wife
file jointly under chapter 7?
Yes. A husband and wife may
file a joint petition under chapter 7. if a joint petition
is filed, only one set of bankruptcy forms is needed and
only one filing fee is charged.
10. Under what conditions
should both spouses file under chapter 7?
Both husband and wife should
file if one or more substantial dischargeable debts are owed
by both spouses. If both spouses are liable for a
substantial debt and only one spouse files under chapter 7,
the creditor may later attempt to collect the debt from the
nonfiling spouse, even if he or she has no income or assets.
In community property states it may not be necessary for
both spouses to file if all substantial dischargeable debts
are community debts. The community property states are
Arizona, California, Idaho, Louisiana, Nevada, New Mexico,
Texas, and Washington.
11. When should a chapter 7
case be filed?
The answer depends on the
status of the debtor's dischargeable debts, the nature and
status of the debtor's nonexempt assets, and the actions
taken or threatened to be taken by the debtor's creditors.
The following rules should be followed:
- Don't file under chapter 7 until all anticipated
debts have been incurred, because it will be another six
years before the debtor is again eligible for a chapter
7 discharge. For example, a debtor who has incurred
substantial medical expenses should not file under
chapter 7 until the illness or injury has either been
cured or covered by insurance, as it will do little good
to discharge, say, $50,000 of medical debts now and then
incur another $50,000 in medical debts in the next few
months.
- Don't file under chapter 7 until the debtor has
received all nonexempt assets to which he or she may be
entitled. If the debtor is entitled to receive an income
tax refund or a similar nonexempt asset in the near
future, he or she should not file under chapter 7 until
after the refund or asset has been received and disposed
of. Otherwise, the refund or asset will become the
property of the trustee.
- Don't file under chapter 7 if the debtor expects to
acquire property through inheritance, life insurance or
divorce in the next 180 days, because the property will
have to be turned over to the trustee unless it is
exempt.
If a hostile creditor action
threatens a debtor's exempt assets or future income, the
case should be filed immediately to take advantage of the
automatic stay that accompanies the filing of a chapter 7
case (see Question 12, below), if a creditor has threatened
to attach or garnishee the debtor's wages or if a
foreclosure action has been instituted against the debtor's
residence, it may be necessary to file a chapter 7 case
immediately in order to protect the debtor's interest in the
property.
12. How does the filing of a
chapter 7 case affect collection and other legal proceedings
that have been filed against the debtor in other courts?
The filing of a chapter 7
case automatically stays (or stops) virtually all collection
and other legal proceedings pending against the debtor. A
few days after a chapter 7 case is filed, the court mails a
notice to all creditors ordering them to refrain from any
further action against the debtor. If necessary, this notice
may be served earlier by the debtor or the debtor's
attorney. Any creditor who intentionally violates the
automatic stay may be held in contempt of court and may be
liable to the debtor in damages. Criminal proceedings and
actions to collect alimony, maintenance, or support from
exempt property or property acquired by the debtor after the
chapter 7 case was filed are not affected by the automatic
stay. The automatic stay also does not protect cosigners and
guarantors of the debtor, and a creditor may continue to
collect debts of the debtor from those persons after the
debtor files a chapter 7 case.
13. May a person file under
chapter 7 if his or her debts are being administered by a
financial counselor?
Yes. A financial counselor
has no legal right to prevent anyone from filing under
chapter 7.
14. How does filing under
chapter 7 affect a person's credit rating?
It will usually worsen it, if
that is possible. However, some financial institutions
openly solicit business from persons who have recently filed
under chapter 7, apparently because it will be at least six
years before they can again file under chapter 7. If there
are compelling reasons for filing under chapter 7 that are
not within the debtor's control (such as an illness or an
injury), some credit rating agencies may take that into
account in rating the debtor's credit after filing.
15. Are the names of persons
who file under chapter 7 published?
When a chapter 7 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 report or publish the names of
consumers who file under chapter 7.
16. Are employers notified
of chapter 7 cases?
Employers are not usually
notified when a chapter 7 case is filed. However, the
trustee in a chapter 7 case often contacts an employer
seeking information as to the status of the debtor's wages
or salary at the time the case was filed. If there are
compelling reasons for not informing an employer in a
particular case, the trustee should be so informed and he or
she may be willing to make other arrangements to obtain the
necessary information.
17. Does a person lose any
legal or civil rights by filing under chapter 7?
No. Filing under chapter 7 is
not a criminal proceeding, and a person does not lose any
civil or constitutional rights by filing.
18. May employers or
governmental agencies discriminate against persons who file
under chapter 7?
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 7. It is also illegal for local, state, or federal
governmental units to discriminate against a person as to
the granting of licenses (including a driver's license),
permits, student loans, and similar grants because that
person has filed under chapter 7.
19. Does a person lose all
of his or her property by filing under chapter 7?
Usually not. Certain property
is exempt and cannot be taken by creditors, unless it is
encumbered by a valid mortgage or lien. A debtor is usually
allowed to retain his or her unencumbered (or unsecured)
exempt property in a chapter 7 case. A debtor may also be
allowed to retain certain encumbered (or secured) exempt
property (see Question 28, below). Depending on the law of
the local state, property that is exempt in a chapter 7 case
may be either property that is exempt under state law or
property that is exempt under the Bankruptcy Code.
20. When must a debtor
appear in court in a chapter 7 case and what happens there?
The first court appearance is
for a hearing called the "meeting of creditor." This hearing
usually takes place about a month after the case is filed.
At this hearing the debtor is put under oath and questioned
about his or her debts and assets by the hearing officer or
trustee. In most chapter 7 consumer cases no creditors
appear in court; but any creditor that does appear is
usually allowed to question the debtor. If the bankruptcy
court decides not to grant the debtor a discharge or if the
debtor wishes to reaffirm a debt and is not represented by
an attorney, there will be another hearing about three
months later which the debtor will have to attend.
21. What happens after the
meeting of creditors?
After the meeting of
creditors, the trustee may contact the debtor regarding the
debtor's property, and the court may issue certain orders to
the debtor. These orders are sent by mail and may require
the debtor to mm certain property over to the trustee, or
provide the trustee with certain information. If the debtor
fails to comply with these orders, the case may be dismissed
and the debtor may be denied a discharge.
22. What is a trustee in a
chapter 7 case, and what does he or she do?
The trustee is an officer of
the court, appointed to examine the debtor, collect the
debtor's nonexempt property, and pay the expenses of the
estate and the claims of creditors. In addition, the trustee
has certain administrative duties in a chapter 7 case and is
the officer in charge of seeing to it that the debtor
performs the required duties in the case. A trustee is
appointed in a chapter 7 case, even if the debtor has no
nonexempt property.
23. What are the debtor's
responsibilities to the trustee?
The law requires the debtor
to cooperate with the trustee in the administration of a
chapter 7 case, including the collection by the trustee of
the debtor's nonexempt property. If the debtor does not
cooperate with the trustee, the chapter 7 case may be
dismissed and the debtor may be denied a discharge.
24. What happens to the
property that the debtor turns over to the trustee?
It is usually converted to
cash, which is used to pay the fees and expenses of the
trustee and to pay the claims of unsecured creditors. The
trustee's fee is usually $45 plus a percentage of the amount
collected from the debtor.
25. What if the debtor has
no nonexempt property for the trustee to collect?
If, from the debtor's chapter
7 forms, it appears that the debtor has no nonexempt
property, a notice will be sent to the creditors advising
them that there appears to be no assets from which to pay
creditors, that it is unnecessary for them to file claims,
and that if assets are later discovered they will then be
given an opportunity to file claims. This type of case is
referred to as a no-asset case. Approximately one-half of
all chapter 7 cases that are filed are no-asset cases.
26. How are secured
creditors dealt with in a chapter 7 case?
Secured creditors are
creditors with valid mortgages or liens against property of
the debtor. Property of the debtor that is encumbered by a
valid mortgage or lien is called secured property. A secured
creditor is usually per-mired to repossess or foreclose its
secured property, unless the value of the secured property
greatly exceeds the amount owed to the creditor. The claim
of a secured creditor is called a secured claim and secured
claims must be collected from or enforced against secured
property. Secured claims are not paid by the trustee. A
secured creditor must prove the validity of its mortgage or
lien and obtain a court order before repossessing or
foreclosing on secured property. The debtor should not turn
any property over to a secured creditor until a court order
has been obtained. The debtor may be permitted to retain or
redeem certain types of secured personal property (see
Question 28, below).
27. How are unsecured
creditors dealt with in a chapter 7 case?
An unsecured creditor is a
creditor without a valid lien or mortgage against property
of the debtor. If the debtor has nonexempt assets, unsecured
creditors may file claims with the court within 90 days
after the first date set for the meeting of creditors. The
trustee will examine these claims and file objections to
those deemed improper. When the trustee has collected all of
the debtor's nonexempt property and converted it to cash,
and when the court has ruled on the trustee's objections to
improper claims, the trustee will distribute the funds in
the form of dividends to the unsecured creditors according
to the priorities set forth in the Bankruptcy Code.
Administrative expenses, claims for wages, salaries, and
contributions to employee benefit plans, claims for the
refund of certain deposits, claims for alimony, maintenance
support, and tax claims, are given priority, in that order,
in the payment of dividends by the trustee. If there are
funds remaining after the payment of these priority claims,
they are distributed pro rata to the remaining unsecured
creditors.
28. What secured property
may a debtor retain or redeem in a chapter 7 case?
A debtor may retain and
redeem certain secured personal and household property, such
as household furniture, appliances and goods, wearing
apparel, and tools of trade, without payment to the secured
creditor, if the property is exempt and if the mortgage or
lien against the property was not incurred for the purpose
of financing the purchase of the property. A debtor may also
retain and redeem without payment to the secured creditor
any secured property that is both exempt and subject only to
a judgment lien. Finally, a debtor may redeem certain exempt
personal, family, or household property by paying to the
secured creditor an amount equal to the value of the
property, regardless of how much is owed to the creditor.
Deadlines are imposed on the enforcement of these rights by
the debtor during the bankruptcy case.
29. How can a debtor
minimize the amount of money or property that must be turned
over to the trustee in a chapter 7 case?
In a chapter 7 case the
debtor is required to mm over to the trustee only the
nonexempt money or property that he or she possessed at the
time the case was filed. Many nonexempt assets of consumer
debtors are liquid in nature and tend to vary in size or
amount from day to day. It is wise, therefore, for the
debtor to engage in some negative estate planning so as to
minimize the value or amount of these liquid assets on the
day and hour that the chapter 7 case is filed. The most
common nonexempt liquid assets, and the assets that the
trustee will be most likely to look for, include the
following:
- cash,
- bank accounts,
- prepaid rent,
- landlord and utility deposits,
- accrued earnings and benefits,
- tax refunds, and
- sporting goods.
It is usually advantageous
for the debtor to take steps to insure that the value of
each of these assets is as low as possible on the day and
hour that the chapter 7 case is filed. By doing this the
debtor will not be cheating or acting illegally; the debtor
will simply be using the law to his or her advantage, much
the same as a person who takes advantage of loopholes in the
tax laws.
Cash. If possible, the
debtor should have no cash on hand when the chapter 7 case
is filed. Further, if the debtor has received cash or the
equivalent of cash in the form of a paycheck or the closing
of a bank account shortly before the filing of the case, the
debtor should obtain receipts when disposing of the funds in
order to prove to the trustee and the court that the funds
were disposed of prior to the filing of the case. Money
possessed by the debtor shortly before the filing of a
chapter 7 case may be spent on such items as food and
groceries, the chapter 7 filing fee, the attorney's fee in
the chapter 7 case, and the payment of up to $600 to
creditors whom the debtor intends to continue paying after
the filing of the chapter 7 case. Payments should not be
made to friends or relatives, however, as the trustee may
later recover these payments.
Bank Accounts. The
best practice is to close out all bank accounts before
filing under chapter 7. If a bank account is not closed, the
balance of the account should be as close to zero as the
bank will allow and all outstanding checks must clear the
account before the case is filed. If the debtor has written
a check to someone for, say, $50 and if the check has not
cleared the account when the case is filed, the $50 in the
account to cover the outstanding check will be deemed an
asset of the debtor and will have to be paid to the trustee.
Prepaid Rent. If the
debtor's rent is paid on the first day of the month and if
the debtor's chapter 7 case is filed on the tenth day of the
month, the portion of the rent covering the last 20 days of
the month, if not exempt, will be deemed an asset of the
debtor and will later have to be paid to the trustee. If
possible, the debtor should make arrangements with the
landlord to pay rent only through the date that the case is
to be filed and to pay the balance of the rent from funds
acquired after the case is filed. If this is not possible,
the case should be filed near the end of the rent period.
Landlord and Utility
Deposits. Unless they are exempt, the debtor should
attempt to obtain the refund of all landlord and utility
deposits before filing a chapter 7 case. Otherwise, the
deposits, or their cash equivalents, will have to be paid to
the trustee.
Accrued Earnings and
Benefits. In most states, and under the federal law,
only a certain percentage (usually 75%) of a debtor's
earnings are exempt. Therefore, the trustee may be allowed
to take the nonexempt portion (usually 25%) of any accrued
and unpaid wages, salary, commissions, vacation pay, sick
leave pay, and other accrued and nonexempt employee
benefits. Normally, then, the best time to file a chapter 7
case is the morning after payday. Even then, if the pay
period does not end on payday, the debtor may have accrued
earnings unless special arrangements are made with the
employer. If annual leave or vacation pay is convertible to
cash, it should be collected by the debtor before the
chapter 7 case is filed, as should any other nonexempt
employee benefits that are convertible to cash.
Tax Refunds. In most
states, a tax refund is not exempt and becomes the property
of the trustee if it has not been received by the debtor
prior to the filing of a chapter 7 case. Therefore, if the
debtor is scheduled to receive a tax refund, a chapter 7
case should not be filed until after the refund has been
received and disposed of. Even if the case is filed before
the end of the tax year, if the debtor later receives a
refund, the trustee may be entitled to the portion of the
refund earned prior to the filing of the case. The best
practice, then, is to either file the chapter 7 case early
in the tax year (but after the refund from the previous year
has been received) or make arrangements to insure that there
will be no tax refund for that year.
Sporting Goods. If the
debtor owns guns, fishing gear, skis, cameras, or similar
items of value that are not exempt, he or she will later
have to mm them, or their cash equivalent, over to the
trustee. Such items should be disposed of prior to the
filing of the case, especially if they are of considerable
value.
30. May a utility company
refuse to provide service to a debtor if the company's
utility bill is discharged under chapter 7?
If, within 20 days after a
chapter 7 case is filed, the debtor furnishes a utility
company with a deposit or other security to insure the
payment of future utility services, it is illegal for a
utility company to refuse to provide future utility service
to the debtor, or to otherwise discriminate against the
debtor, if its bill for past utility services is discharged
in the chapter 7 case.
31. What should the debtor
do if he or she moves before the chapter 7 case is closed?
The debtor should immediately
notify the bankruptcy court in writing of the new address.
Because most communications between a debtor and the
bankruptcy court are by mail, it is important that the
bankruptcy court always have the debtor's current address.
Otherwise, the debtor may fail to receive important notices
and the chapter 7 case may be dismissed. Many courts have
change-of-address forms for debtors to use when they move,
and the debtor should obtain one if a move is planned.
32. How is a debtor notified
when his or her discharge has been granted?
Usually by mail. Most courts
send a form eared "Discharge of Debtor" to the debtor and to
all creditors. This form is a copy of the court order
discharging the debtor from his or her dischargeable debts,
and it serves as notice that the debtor's discharge has been
granted. It is usually mailed about four months after a
chapter 7 ease is filed.
33. What if a debtor wishes
to repay a dischargeable debt?
A debtor may repay as many
dischargeable debts as desired after filing under chapter 7.
By repaying one creditor, a debtor does not become legally
obligated to repay any other creditor. The only
dischargeable debt that a debtor is legally obligated to
repay is one for which the debtor and the creditor have
signed what is called a "reaffirmation agreement." if the
debtor was not represented by an attorney in negotiating the
reaffirmation agreement with the creditor, the reaffirmation
agreement must be approved by the court to be valid, if the
debtor was represented by an attorney in negotiating the
reaffirmation agreement, the attorney must file the
agreement and the attorney's statement with the court in
order for the agreement to be valid, if a dischargeable debt
is not covered by a reaffirmation agreement, a debtor is not
legally obligated to repay the debt, even if the debtor has
made a payment on the debt since filing under chapter 7, has
agreed in writing to repay the debt, or has waived the
discharge of the debt.
34. How long does a chapter
7 case last?
A chapter 7 case begins with
the filing of the case and ends with the dosing of the case
by the court. If the debtor has no nonexempt assets for the
trustee to collect, the case will most likely be dosed
shortly after the debtor receives his or her discharge,
which is usually about four months after the case is filed.
If the debtor has nonexempt assets for the trustee to
collect, the length of the case will depend on how long it
takes the trustee to collect the assets and perform his or
her other duties in the case. Most consumer cases with
assets last about six months, but some last considerably
longer.
35. What should a person do
if a creditor later attempts to collect a debt that was
discharged under chapter 7?
When a chapter 7 discharge is
granted, the court enters an order prohibiting the debtor's
creditors from later attempting to collect any discharged
debt from the debtor. Any creditor who violates this court
order may be held in contempt of court and may be liable to
the debtor in damages. If a creditor later attempts to
collect a discharged debt from the debtor, the debtor should
give the creditor a copy of the order of discharge and
inform the creditor in writing that the debt has been
discharged under chapter 7. If the creditor persists, the
debtor should contact an attorney. If a creditor files a
lawsuit against the debtor on a discharged debt, it is
important not to ignore the matter, because even though a
judgment entered against the debtor on a discharged debt can
later be voided, voiding the judgment may require the
services of an attorney, which could be costly to the
debtor.
36. How does a chapter 7
discharge affect the liability of cosigners and other
parties who may be liable to a creditor on a discharged
debt?
A chapter 7 discharge
releases only the debtor. The liability of any other party
on a debt is not affected by a chapter 7 discharge.
Therefore, a person who has cosigned or guaranteed a debt
for the debtor is still liable for the debt regardless of
the debtor's chapter 7 discharge. The only exception to this
rule is in community property states where the spouse of a
debtor is released from certain community debts by the
debtor's chapter 7 discharge.
37. What is the role of the
attorney for a consumer debtor in a chapter 7 case?
The debtor's attorney performs
the following functions in the chapter 7 case of a typical
consumer debtor..
- Analyze the amount and nature of the debts owed by
the debtor and determine the best remedy for the
debtor's financial problems.
- Advise the debtor of the relief available under both
chapter 7 and chapter 13 of the Bankruptcy Code, and of
the advisability of proceeding under each chapter
- Assemble the information and data necessary to
prepare the chapter 7 forms for filing.
- Prepare the petitions, schedules, statements and
other chapter 7 forms for filing with the bankruptcy
court.
- Assist the debtor in arranging his or her assets so
as to enable the debtor to retain as many of the assets
as possible after the chapter 7 case.
- Filing the chapter 7 petitions, schedules,
statements and other forms with the bankruptcy court,
and, if necessary, notifying certain creditors of the
commencement of the case.
- If necessary, assisting the debtor in reaffirming
certain debts, redeeming personal property, setting
aside mortgages or liens against exempt property, and
otherwise carrying out the matters set forth in the
debtor's statement of intention.
- Attending the meeting of creditors with the debtor
and appearing with the debtor at any other hearings that
may be held in the case.
- If necessary, preparing and filing amended
schedules, statements, and other documents with the
bankruptcy court in order to protect the rights of the
debtor.
- If necessary, assisting the debtor in overcoming
obstacles that may arise to the granting of a chapter 7
discharge.
The fee paid, or agreed to be
paid, to an attorney representing a debtor in a chapter 7
case must be disclosed to and approved by the bankruptcy
court. The court will allow the attorney to charge and
collect only a reasonable fee. Many attorneys collect all or
most of their fee before the case is fried.
38. What if a debtor's
bankruptcy forms are not prepared by an attorney?
It is not legally required
that a debtor's bankruptcy forms be prepared by or under the
direction of an attorney. However, it is difficult to
properly prepare bankruptcy forms without giving legal
advice to the debtor. Because many non-attorney bankruptcy
preparers attempt to give legal advice to debtors without
having the legal training and knowledge necessary to give
such advice, Congress has passed an amendment to the
Bankruptcy Code that deals with non-attorney bankruptcy
preparers. This law requires all non-attorney bankruptcy
preparers to sign and print their names on the documents
that they prepare and to give copies of all filed documents
to the debtor. This law also provides that if a bankruptcy
case is later dismissed because of the fraud or incompetence
of the preparer, or if the preparer commits an inappropriate
or deceptive act, the debtor may recover actual damages from
the preparer, plus statutory damages of $2,000 or twice the
amount paid to the preparer (whichever is greater), plus
attorney fees and costs. A bankruptcy preparer may also be
enjoined from further work in the bankruptcy preparation
business and may be criminally prosecuted if a bankruptcy
case is dismissed because the preparer disregarded the
requirements of the bankruptcy laws or roles.
Williamson, John H. The Attorney 's Handbook on
Consumer Bankruptcy and Chapter 13.
23rd ed. Lakewood, Colorado: Argyle Publishing Company,
1999. 5-13.
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Chapter 13 Frequently Asked Questions
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 or her debts under the
supervision and protection of the bankruptcy court. The
Bankruptcy Code is that portion of the federal laws that
deal 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 to become effective. 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 or her dischargeable
debts.
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 to
pay as much as possible of the debtor's debts, while in most
chapter 13 cases 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 7, the debtor usually retains his or
her nonexempt property, must pay off as much of his or her
debts as the court deems feasible, and receives a chapter 13
discharge, which is broader than a chapter 7 discharge and
releases the debtor from liability for several types of
debts that are not dischargeable under chapter 7. However, a
chapter 13 cue normally lasts much longer than a chapter 7
case and is usually more expensive for the debtor.
3. When is chapter 13
preferable to chapter 7 for a debtor?
Chapter 13 is usually preferable
for a person who:
- 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,
- has valuable nonexempt property or has valuable
exempt property securing debts, either of which would be
lost in a chapter 7 case,
- is not eligible for a discharge under chapter 7,
- has one or more substantial debts that are
dischargeable under chapter 13 but not under chapter 7,
or
- has sufficient assets with which to repay most
debts, but needs temporary relief from creditors in
order to do so.
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 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 to discharge a debtor from
unpaid portions of debts. Private debt consolidation
services have none of these powers.
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: a full or successful plan discharge, which is
granted to a debtor who completes all payments called for in
the plan, and 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. A full
chapter 13 discharge is broader and discharges more debts dm
a chapter 7 discharge, while a partial chapter 13 discharge
is similar to a chapter 7 discharge.
6. What types of debts are
dischargeable under chapter 13?
A full chapter 13 discharge
must be granted upon the completion of all payments required
in the plan discharges a debtor from all debts except:
- debts that were paid outside of the plan and not
covered in the plan,
- debts for alimony, maintenance, or support
- debts for death or personal injury caused by the
debtor's operation of a motor vehicle while unlawfully
intoxicated,
- debts for restitution or criminal fines included in
a criminal sentence imposed on the debtor,
- debts for most student loans or educational
obligations that first became less than 7 years before
the case was filed,
- installment debts whose last payment is due after
the completion of the plan, and
- debts incurred while the plan was in effect that
were not paid under the plan.
A partial chapter 13
discharge granted when a debtor is unable to complete the
payments under a plan due to circumstances for which the
debtor should not be held accountable, discharges the debtor
from all debts except:
- secured debts (i.e., debts secured by mortgages or
liens),
- debts that were paid outside of the plan and not
covered in the plan,
- installment debts whose last payment is due after
the completion of the plan,
- debts incurred while the plan was in effect that
were not paid under the plan, and
- debts that are not dischargeable under chapter 7.
7. 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 continue, how much will be paid to each
of the debtor's creditors, which creditors will be paid
outside of the and certain other technical matters.
8. 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 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.
9. 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.
10. Must all debts be paid
in full under a chapter 13 plan
No. While priority debts,
such as debts for alimony, maintenance and support and debts
for taxes, and fully secured debts must be paid in full
under a chapter 13 plan, only an amount that the debtor can
reasonably afford Fast 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.
11. Must an unsecured
creditor's 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 prying little or nothing to others.
12. How much of a debtor's
income must be paid to the 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-year period must be paid to the chapter 13 trustee.
Disposable income is income received by the debtor and his
or her spouse that is not reasonably necessary for the
support of the debtor and the debtor's dependents.
13. When must the debtor
begin making payments to the chapter 13 trustee and how must
they be made?
The debtor must begin making
payments to the chapter 13 trustee within 30 days after the
debtor's plan is filed in the court, and 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,
biweekly, or monthly basis. If the debtor is employed, some
courts require the payments to be made by the debtor's
employer, otherwise, the payments cm be made by either the
debtor or the debtor's employer.
14. How long does a chapter
13 plan last?
A chapter 13 plan must last
for three years, unless all debts can be paid off in full in
less time. However, a chapter 13 plan can last for as long
as five years, if necessary.
15. 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 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.
16. How are secured
creditors dealt with under chapter 13?
There are four methods of
dealing with secured creditors under chapter 13:
- The creditor may accept the debtor's proposed plan,
- The creditor may retain its lien and be paid the
full amount of its secured claim under the plan,
- Debtor may surrender the collateral to the creditor,
or
- The creditor may be paid or dealt with outside of
the plan.
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. Thus, a creditor with a
mortgage on, say, a $1500 automobile, cannot have a secured
claim for more than $1500 regardless of how much is owed to
the creditor. 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.
17. 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 cosigner or
guarantors. 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 cosigner or guarantors A
consumer debt is a nonbusiness debt. Creditors may collect
business debts from cosigners or guarantors even if the
debts are to be paid in full under the debtor's plan.
18. Who is eligible to file
under chapter 13?
Any natural person may file
under chapter 13 if the person:
- resides in, does business in, or owns property in
the United States,
- has regular income,
- has unsecured debts of less than $250,000,
- has secured debts of less than $750,000,
- is not a stockbroker or a commodity broker, and
- has not been a debtor in another bankruptcy case
that was dismissed within the last 180 days on certain
technical grounds. 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. Corporations, partnerships and
limited liability companies may not file under chapter
13.
19. 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,
except that only one of them need have regular income and
their combined debts must meet the debt limitations
described in the answer to Question 18 above.
20. 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.
21. 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.
22. 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 debtor has not been previously converted to
chapter 7 from chapter 13.
23. 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.
24. What fees are charged in
a chapter 13 case?
There is a $185 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 10 percent 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 $685 (a $500 trustee's fee, plus the $185
filing fee). These fees are in addition to the fee charged
by the debtor's attorney.
25. 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.
26. 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) an lawsuits, attachments,
garnishments, foreclosures, 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 dosed.
27. 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.
28. How does filing under
chapter 13 affect a person's credit rating?
It may worsen it, at least
temporarily. However, if most of a person's debts are
ultimately paid off under a chapter 13 plan, that fact may
be taken into account by credit reporting agencies. If very
little is paid on most debts, the credit-rating effect of a
chapter 13 case may be similar to that of a chapter 7 case.
29. Are the names 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.
30. 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.
31. 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.
32. 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 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, student loans, and similar grants
because that person has filed under chapter 13.
33. What is required for
court approval of the chapter 13 plan?
The court may confirm a chapter
13 plan if:
- the plan complies with the legal requirements of
chapter 13,
- all required fees, charges, and deposits have been
paid,
- all priority claims will be paid in full under the
plan,
- the plan was proposed in good faith,
- each unsecured creditor will receive under the plan
at least as much as it would have received had the
debtor filed under chapter 7,
- it appears that the debtor will be able to make the
required payments and comply with the plan, and
- each secured creditor has been dealt with in the
manner described in the answer to Question 16 above.
34. When does a debtor have
to appear in court in a chapter 13 case?
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 confirmation hearing may be held on the same day
as the meeting of creditors or at a later date 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.
35. What if the court does
not approve a filed chapter 13 plan?
If the court will not approve
the plan proposed by a debtor, the debtor may modify the
plan and seek court approval of the modified 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 modified so as become acceptable to the court.
A debtor who does not wish to modify a proposed plan may
either convert the plan to chapter 7 or dismiss the case.
36. How are the claims of
unfiled 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 are 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, priority
creditors, and special classes of unsecured creditors may
begin earlier, if desired.
37. 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
continue indefinitely or for an extended period, the case
may be dismissed or converted to chapter 7.
38. What if the debtor
incurs new debts or needs credit during a 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:
- debts for taxes that become payable while the case
is pending, and
- 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. Some 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. Therefore, the approval of the chapter 13 trustee
should be obtained before incurring credit or new debts
after the case has been filed. The incurrence of regular
debts, such as debts for telephone service and utilities, do
not require the trustee's approval.
39. What should the debtor
do if he or she moves while the case is pending?
The debtor should immediately
notify the bankruptcy court and the chapter 13 trustee in
writing of the new address. Most communications in a chapter
13 case are by mail, and 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.
Many courts have change-of-address forms that may be used if
the debtor moves.
40. 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 filed employer to make the payments
and to comply with the orders of the court. Therefore, the
debtor who wishes to discontinue a chapter 13 case should do
so through his or her attorney.
41. 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:
- dismiss the chapter 13 case,
- convert the chapter 13 case to chapter 7, or
- 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.
42. What is the role of the
filed attorney in a chapter 13 case?
The filed attorney performs the
following functions in a typical chapter 13 case:
- Examining the filed 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.
- Assisting the debtor in the preparation of a budget
- Examining the liens or security interests of secured
creditors to ascertain their validity or avoidability,
and taking the legal steps necessary to protect the
filed interest in such matters.
- Devising and implementing methods of dealing with
secured creditors.
- Assisting the debtor in devising a chapter 13 plan
that meets the needs of the debtor and is acceptable to
the court.
- Preparing the necessary pleadings and chapter 13
forms.
- Filing the chapter 13 forms and pleadings with the
court and paying, or providing for the payment of, the
filing fee.
- Attending the meeting of creditors, the confirmation
hearing, and any other court hearings required in the
case.
- Assisting the debtor in obtaining court approval of
a chapter 13 plan.
- Checking the claims filed in the case, filing
objections to improper claims, and attending court
hearings thereon.
- Assisting the debtor in overcoming any legal
obstacles that may arise during the course of the case.
- Assisting the debtor in obtaining a discharge upon
the completion or termination of the plan.
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.
Williamson, John H. The Attorney 's Handbook on
Consumer Bankruptcy and Chapter 13.
23rd ed. Lakewood, Colorado: Argyle Publishing Company,
1999. 5-13.
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