Bankruptcy: In The Beginning
Richard Fonfrias, J.D.
Chicago's Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
Confirmed Chapter 13 Case
Your Chapter 13 bankruptcy is a repayment plan that you establish to pay off your creditors. The repayment period can be as long as five years. Once the Court approves your plan, the Court does not allow a creditor to foreclose on your home, repossess your property, or try to collect on your debts.
Once the Court confirms your Chapter 13 case, then the Court and the Bankruptcy Trustee review the Chapter 13 plan that you submitted. If they approve it, then you make payments according to your plan so your creditors get paid. You send your payment to the Chapter 13 Trustee and the Trustee in turn sends money to the creditors. If your plan includes mortgages, make sure you make those payments on time and in the correct amounts. If you pay your mortgage late, make sure you include the late charges. You keep paying on your plan until the Trustee notifies you that your plan is completely paid off.
Not All Unsecured Creditors File a Claim
In Chapter 13 bankruptcy, you must list all of your creditors. This is so the Court can notify them of your bankruptcy. Then they have a specific period of time to file a claim with the Court if they want to be paid. If they don't file a claim, then they won't get paid. And once your case is discharged by the Court, you won't owe these creditors anything. Many unsecured creditors do not file claims in bankruptcy.
If you included creditors in your Chapter 13 bankruptcy and still receive calls from them, the creditors may not know that you have filed bankruptcy. Give them my name and phone number or your bankruptcy case number and tell them that you have a bankruptcy lawyer representing you. You can also provide them with a copy of your bankruptcy notice, which they should have received after you filed. If creditors continue to call you, let me know and I'll contact them because this may violate bankruptcy laws. Nothing stops harassment by creditors faster than a call or letter from a lawyer.
Chapter 7 Liquidation Bankruptcy
In Chapter 7 you do not pay money to the bankruptcy Trustee out of your wages or future income. Instead, the money that goes to your creditors comes from the sale of your real and personal property. A Chapter 7 bankruptcy can take a few months; however, it does not stop foreclosures or repossessions of your assets.
Overlooking a Debt
If you forgot to list a debt that you owed prior to filing bankruptcy, then you should send me a copy of the invoice. Then I will send notice to the court to add it to your list of debts. As your bankruptcy attorney, it is my job to help you throughout the bankruptcy process.
If your Chapter 13 plan includes your car, then the bankruptcy Trustee will send your money to the bank until your car is completely paid for. Don't forget to have your car fully insured and make sure that the bank is listed as the loss-payee on your insurance policy. If you aren't sure who the loss-payee is, contact your insurance agent.
Federal & State Tax Debts
If you included a tax debt to IRS or the State in your bankruptcy, then either agency can garnish your tax refund and apply it to the debt included in your bankruptcy. After they apply your refund to your debt, they must reduce the amount of their claim in your bankruptcy. This reduces the time necessary to pay off this debt.