OFFICE OF THE CHAPTER 13 TRUSTEE

DEBTOR ORIENTATION HANDBOOK

    

“STRIVING FOR FINANCIAL STABILITY THROUGH EDUCATION”   

                                Edward A. Bailey
STANDING TRUSTEE

REVISED 2/16/2006

TABLE OF CONTENTS

FREQUENTLY ASKED QUESTIONS

Mission Statement	    i

Introduction letter from the Trustee	   ii	 

Personal information on my Chapter 13 case                                                                  iii
                          
Who is my Trustee and how do I contact his office?	    1          

How will I make my payments into the plan?	    1

What is a wage deduction?	    2

How do I calculate the amount of money that will be deducted from each pay? 	    2

May I make extra payments or send extra monies to the Trustee’s Office?	    3

When is my first payment due and when are all subsequent payments due?                    3

What if I have a problem with my employer because of filing  a Chapter 13  plan?	    3

What happens if I change jobs?	    4

Do you need to know if I move?  	    4

What if I have legal questions?	    4

How long will my plan last?	    4

Will my creditors continue to call?	    5

What if I forgot to list a creditor?                    	    5

How will my creditors be paid?	    6

Why do creditors have to file a Proof of Claim with the Court?	    6

How will my house payment be handled?                                                                        6

Is my car payment included in my plan?                                                                          7

How will the IRS view my Chapter 13 plan?	   7

Will my co-signers be protected by my Chapter 13?	   7
What about credit use while I’m in the plan?	   8

May I buy any property while I’m in the plan?	   8

May I sell any of my property while I’m in the plan?	   9

May I continue making contributions to my 401(k)?	   9

Will I get payment statements from the Trustee?	   9

May I pay-off my plan early?	   9

What does it mean to have my case dismissed?	 10

What happens when I complete my plan?	 10

What happens to any debts that are not paid in full?	 11

What about debts paid in full after completion of the plan?	 11
 
How long will my bankruptcy filing be reflected in my credit report?                         	 11

Is there life after debt?	 11  	      
A Note from the Director of Debtor Education	 13

Note section	 15

Glossary                                                                                                                         17   

Appendix
 
       Wage Order Deduction                                                                                             1	                                      
       Notice of Intention to Pay Claims                                                                      	   2
  
       Semi- Annual Report	   3	
      
       Final Report	   4

      Order of Discharge	   5

MISSION STATEMENT:

The Mission of Debtor Orientation is to educate debtors about the Chapter 13 process and the protections afforded them under the Bankruptcy Code. 
   
VISION:

The Chapter 13 Trustee in Columbus, Mr. Frank Pees, firmly believes that education is the key factor in successfully completing your plan. This belief has been the driving factor in initiating this program.

-i-

Please allow me to share with you that this trusteeship understands the trying and difficult circumstances that led to your filing your Chapter 13 case.  Unfortunately, bad things can sometimes happen to good people.  My entire staff and I empathize with your situation and we pledge to work with you toward the successful completion of your plan.  Tomorrow can be better, working together. 

Communication, understanding, and attentiveness are important factors in all relationships.  The financial relationship that now exists between my staff and you is no exception. I cannot stress enough that maintaining good lines of communication is the key to reaching the goal of successfully completing your plan. 

This booklet is designed, written, and created to help you understand your                        responsibilities in the Chapter 13 process.  Some of the information contained in this booklet is unique to this district of the Bankruptcy Court and to our Chapter 13 office.  As you will discover, the Columbus jurisdiction has a number of opportunities for your benefit, growth, and awareness. Not only do we want you to realize the protection afforded you during the term of your plan, but we also want to help you avoid the pitfalls that made you seek that protection in the first place. To that end, we stress education and credit re-establishment through our orientation and series of debtor seminars. These Chapter 13 programs are designed to give you a positive start in your plan and to answer any questions you may have regarding the Chapter 13 process. You will also receive help in re-establishing your credit once your plan completes.  Make sure you keep this booklet in a convenient place as a handy reference when questions arise over the life of your plan. Please note, however, that it is not meant to replace the advice of your attorney.  

I want to commend you for the responsible choice you have made in dealing with your financial crisis.  You have selected the chapter of the Bankruptcy Code that is about the business of “paying back.”  Once your plan is confirmed, you will have reached a very positive turning point in your financial life and can look forward to a bright future.  Allow me to once again tell you that my staff and I remain committed to helping you reach your goal of successfully completing your plan.   

Yours very truly,

		Edward A. Bailey

- ii -

MY CHAPTER 13 CASE

MY NAME_______________________________________
MY CASE NUMBER_____________________________________
MY ATTORNEY________________________________________
MY ATTORNEY’S PHONE NUMBER______________________

	CHAPTER 13 TRUSTEE
                                               (614) 436-6700
                                        1-800-282-1001 (Ohio only)
                               Fax (614) 436-0190 or (614) 842-6347        

TRUSTEE STAFF EXTENSION LIST:

Receptionist:                                               		      	Louise   	 -ext.100

Post-Confirmation Case Administrators:
Team Leader						Anita		-ext. 129
Cases ending in numbers 0,1				Val		-ext. 159
Cases ending in numbers 2,3			        	Jill		-ext. 141			
Cases ending in number 4 and 5			Andrea		-ext. 129
Cases ending in numbers 6, 7                               	Tammy	-ext. 152
Cases ending in numbers 8,9                                	Lucy		-ext. 142

Accounts and Receipts
           Cases ending in numbers 1,2,3		        	Betsy      	-ext. 155
           Cases ending in numbers 4,5,6                               	Shana		-ext. 131
           Cases ending in numbers 7,8,9                               	Pam        	-ext. 147              
         *Cases ending in 0 should be directed to the person with the number preceding
           the ending 0  

Dismissals:							Angela		-ext. 136
Paid in Full/Discharge:					Shelley       	-ext. 132
 
Debtor Education: 					         	Kathy     	-ext. 111

YOU CAN ACCESS YOUR CASE INFORMATION ON THE TRUSTEE’S WEBSITE AT www.13network.com

					-iii-
Chapter 13 FAQs
(Frequently Asked Questions)

Who is my Trustee and how do I contact his office?

Edward A. Bailey has been the Chapter 13 Trustee in the Columbus, Ohio division for over 25 years. Due to his very hectic schedule, he is unable to personally assist you.  However, his professional staff is at your disposal for answering any procedural questions concerning your plan.  You can reach our office at (614) 436-6700 or 1-800-282-1001 (Ohio only) between the hours of 8:30 a.m. and 4:30 p.m. Monday through Friday.

After your plan is confirmed, you will be assigned to a case administrator according to the last digit in your case number.  If your case administrator is unavailable when you call, use the voice mail system to leave a message.  When doing so, please speak slowly and clearly state the nature of your call, your case number, your phone number and the best time to reach you.

If you have a need to come into the office, please telephone before visiting the office to make an appointment.  By making an appointment, you are assured that the appropriate staff member will be present and that you will not have to wait.  This also allows the staff member time to review your file.

How will I make my payments into the plan?

The most common method of payment and the method usually required by this office is through payroll deduction. Your employer will be sent paperwork to begin the process. PLEASE NOTE that this often takes some time to take effect.  Until such deductions begin, YOU are responsible for making direct payments to the Trustee.

In rare circumstances, debtors are allowed to make direct plan payments throughout their plan.  Whether making short-term or long-term direct payments, the following procedures are required:
•	Payments must be in the form of a Cashier’s Check or Money Order.
        No personal checks can be accepted until after your case is confirmed.                           Cash is never accepted.
•	Payments must clearly show your name, case number, and your social security number.
•	All payments must be mailed to the Trustee’s bank lockbox. No payments
                   will be accepted at the Trustee’s Office.
•	Payments must be made out to:  Chapter 13 Trustee
•	Payments are to be mailed to:     P.O. Box 71-0795
                                                          Columbus, Ohio 43271-0795

	
The overnight lockbox address is:  	        Chapter 13 Lockbox  #0795
                                                                    Dept. OH1-0471
                                                                    370 S. Cleveland Ave.
                                                                    Westerville, Ohio 43081

These are special lockbox addresses for payments only.  Payments sent to any other address will result in serious delays and possible dismissal of your case.

If you are ever in a position where you are unable to make your plan payments, please notify the Trustee’s office and your attorney immediately.  

	What is a Wage Deduction?

A Wage Deduction is simply a way to more easily fund the plan you voluntarily filed. A Wage Deduction Order*, signed by the Bankruptcy Judge, will be issued to your employer. Your employer will then make your plan payments for you by deducting the total monthly payment from your pay and sending that money to the Trustee’s lockbox. (This money will be deducted in equal installments determined by the frequency of your pay, not in one lump sum.) Both you and your employer should understand that this order IS NOT an attachment or garnishment.

It is essential for YOU to make direct payments to the Trustee’s lockbox until you actually see the plan payments being deducted from your pay check. 

The Court has exclusive jurisdiction over your wages and property during your plan.  Should any employer treat such an order as an attachment, you should advise the Trustee’s office.  The Trustee will assist the employer in understanding that you are making an effort to voluntarily pay your debts rather than not pay them.  We usually find that employers, after an explanation, understand and think more highly of an employee for trying to pay their bills.

	*See Appendix, p. 1.

  How do I calculate the amount of money that will be deducted  from each pay?

The following table can be used to calculate the amount of monies that will be deducted from your pay.   It is important to note that deductions will always be taken in equal installments from EACH PAYCHECK, never in one lump sum.

IF YOU ARE TO PAY BI-WEEKLY:
Multiply the amount of your monthly payment times 12 months per year. Then divide the total by 26 payments per year.  This will equal your bi-weekly payment.

FOR EXAMPLE:  If your monthly payment is $800.00, multiply that payment times 12 months ($800.00 X 12 = $9600.00) and then divide the total amount by 26 payments per year 
($9600.00 ÷ 26 = $369.23).  Your bi-weekly payments are $369.23. 

IF YOU ARE TO PAY SEMI-MONTHLY:
Multiply the amount of your monthly payment times 12 months per year. Then divide the total by 24 payments per year. This will equal your semi-monthly payment. 
FOR EXAMPLE:  If your monthly payments are $800.00, multiply that payment times 12 months ($800.00 X 12 = $9600.00) and then divide the total amount by 24 payments per year 
($9600.00 ÷ 24 = $400.00).  Your semi-monthly payments are $400.00. 

IF YOU ARE TO PAY WEEKLY:
Multiply the amount of your monthly payment times 12 months per year. Then divide the total by 52 pay periods. This will equal your weekly payment.
FOR EXAMPLE:  If your monthly payment is $800.00, multiply that payment times 12 months ($800.00 X 12 = $9600.00) and then divide the total amount by 52 payments per year 
($9600.00 ÷52= $184.61). Your weekly payment is $184.61.

May I make extra payments or send extra monies to the Trustee’s Office?

You may send an extra payment or an extra partial payment to the Trustee’s lockbox whenever it is possible to do so.  This will help to shorten the length of time that you are in the plan.  However, your plan payments work the same as your mortgage payments in that you cannot pay ahead.  So, even though you send extra money one month, you still need to pay the full plan payment on the following month.

When is my first payment due and when are all subsequent payments due?

Your first payment is due 30 days from the filing date of your petition.  Your next payment is due 30 days afterwards. For example, if your petition date is Nov. 3rd, your next full payment is DUE on or before Dec. 3rd.  Remember that this is the DUE date. You need to mail your payments 5 or 6 days in advance of this date in order to allow time for your payment to reach the Trustee’s lockbox.

The Trustee’s Office highly recommends that you begin making your next month’s payment on the next day you are paid.  It can be difficult to come up with the entire payment a few days before it is due.  It is much easier to pay a portion of that payment each time you receive a paycheck.

What if I have a problem with my employer because of filing Chapter 13 Plan?

Occasionally, we find situations in which a credit union or company representative exerts some form of pressure on an employee who owes them money to the extent that the employee feels
his/her job may be in jeopardy due to the filing of a Chapter 13 Plan.  Such tactics are illegal in that they are an attempt to obtain creditor preference.  Any such actions need to be immediately reported to your attorney or to the Trustee’s Office.

Most employers have been very cooperative in assisting with payroll deductions for employees involved in the Chapter 13 Plans.  If your employer has any questions or concerns with regard to the wage deduction, advise the Trustee’s office, and we will contact your employer.
	
					What happens if I change jobs?

If you change jobs, especially if your plan payment is being paid through a payroll deduction., notify your attorney and the Trustee’s office immediately.  This notification  must be made in writing.  A new pay order must be prepared for your employer.  Remember, if there is a delay between the time the payments through your old employer cease and payments through your new employer begin, you are responsible for making direct payments to the Trustee’s lockbox.

Do you need to know if I move?

YES.  The Trustee must have your current address at all times in order to mail important documents throughout the life of your plan.  Any time you change your address, you must notify the Trustee’s office and your attorney in writing, not by phone.  All correspondence should be mailed to our physical address at:

		Chapter 13 Trustee Office
				130 E. Wilson Bridge Rd., Suite 200
		Westerville, Ohio 43085-6300

This address is for correspondence only.  Never send a payment to the physical address.

What if I have legal questions?

The Trustee and his staff cannot give legal advice.  Any and all legal questions concerning your case, a creditor, your rights, your options, or changes in your situation should be directed to your attorney.  Your attorney must continue to represent you as long as your case is active or until the Judge permits him or her to withdraw from your case.  In most cases, your attorney’s legal fees will be paid through your plan payments.

                                          How long would my plan last?

Upon entering a Chapter 13 plan, it is difficult to determine the exact duration of your plan.  It is very rare for a plan to last the exact number of months in the original projection.  A creditor may file a claim for a larger than anticipated amount, interest rates may change or a forgotten creditor may need to be added, any of which could add to the length of your plan.  On the other hand, some creditors may not file a Proof of Claim, thus shortening your repayment time.

Although the length of your plan is influenced by many factors that may change during the course of your plan, no plan is allowed to exceed sixty months. If this situation occurs, the Trustee may file a Motion to Dismiss. Both you and your attorney will receive a copy of that Motion. READ ALL YOUR MAIL.  Any failure to respond to that Motion will result in the dismissal of your case.

Questions regarding accelerated payments should be directed to your attorney.

***TIP: Open any mail  you  receive from the Trustee’s Office on the day that you receive it.  

	Will my creditors continue to call?

All the creditors listed in your Chapter 13 Plan have been sent a notice advising them of the filing of your plan.  They are subject to an Automatic Stay Order that prohibits them from contacting you.  In the event that you are contacted, do not discuss the debt with them, but instead, give them your Chapter 13 case number and the name of your Trustee and attorney. Get the name of the person contacting you and report it to your attorney immediately.

It is important to note that an automatic stay does not prohibit contact initiated by you. You might need to contact a creditor to obtain information on interest paid on a particular debt.  This would most likely be needed for filing your tax returns.  You might also want to contact MORTGAGE HOLDERS at the beginning of your case and on a YEARLY basis to determine that the monthly payments and escrow balances are correct.  This is important to ensure that when you complete your Chapter 13 Plan you will be current as to the mortgage payments and escrow account.

	What if I forgot to list a creditor?

Creditors not listed when you filed your case may cause problems.  There are two kinds of unlisted creditors.  The first type is a creditor to whom you owed money when you first filed your plan and whom you forgot to list (“pre-petition creditors”).  It may be wise to obtain your credit report to make sure there are no debts that you may have forgotten.  If there are, contact your attorney to have those creditors added to your plan right away.    

The second type of creditor is one whose debt was incurred AFTER you filed the plan (“post-petition creditors”).  Post-petition creditors are rare.  Your attorney explained to you that credit is generally not allowed while you are in a Chapter 13 plan.  However, medical expenses and repair bills cannot always be avoided.  You need to pay these bills directly as they cannot normally be added to your plan.  If there are unusual circumstances, you should contact your attorney.  Under certain circumstances, taxes and debts necessary for the success of your plan may be added later and paid through the plan.  Contact your attorney if you think that you have incurred such a debt. Normally, your Trustee cannot and will not allow you to miss a Chapter 13 payment so that you can pay “new debts.”  

How will my creditors be paid?

	Payments to the Trustee are used to pay your attorney, Trustee fees and your creditors. Creditors fall into three basic categories: secured, priority and unsecured.  Generally, the Trustee makes monthly payments to the secured and priority creditors first. After these creditors are paid in full, your payments are then divided among unsecured creditors.  Unsecured creditors may not receive payments for many months or even years.

	As noted, your creditors cannot deal directly with you.  Likewise, you cannot deal directly with them.  You cannot favor one creditor over another or make payments “on the side.” All creditors scheduled in your plan must be paid through the plan, under the terms of the law and not because of personal preference.

Why do creditors have to file a Proof of Claim with the Court?

In order to be paid, each creditor must file a proof of claim after receiving notice of your Chapter 13 filing. Unsecured creditors are allowed 90 days from the date of the first meeting of creditors (341 meeting) to file their claims.  Governmental agencies have 180 days from the filing date of your petition to file a claim.  If they fail to do so, they most likely will not receive payments in the plan.

Six to eight months after the filing of your case, you will receive a document called the Notice of Intention to Pay Claims.*   This document lists all of the creditors in your plan and discloses whether or not a claim has been filed. Carefully check the listing for accuracy.  CONTACT YOUR ATTORNEY IF ANY OF THE CREDITORS OR AMOUNTS APPEAR INACCURATE. 

The Notice of Intention to Pay Claims has a 20 day period from the date of service by the Trustee, during which objections can be filed by you or by creditors.  With exception, if there are no objections, the case becomes final and binding, paying only those creditors who have filed claims.

If there is a creditor you want paid through your plan and that creditor has not filed a claim, contact your attorney promptly about filing a claim for the creditor. Remember that this includes all relatives and friends to whom you owe money.

*See Appendix, p. 2.
 
How will my house payment be handled?

If you were behind in your mortgage payments at the time you filed your bankruptcy, your mortgage payments must be made via conduit (by us) through the Trustee’s Office.  This means that you will include your mortgage payment amount in the monthly plan payment you send to our office and that our office will then make the payment to your mortgage holder.  All arrearages, up to the date of filing, are included as a secured debt also to be paid through the plan.

If no mortgage delinquency existed at the time you filed your petition, you have the option of making your payments directly to your mortgage holder.  If you choose to exercise this option, you are responsible for making your regular monthly payments to the mortgage company.  It is vital that you do so in a timely manner. If something unforeseen happens and you are unable to make a payment, contact your attorney immediately.

Whether your mortgage payment is paid via conduit (by us) or by you directly, you  must maintain adequate insurance on your home if it is not included in your mortgage payment.  If you are making your mortgage payments directly, please note that failure to make those payments on time could result in you losing your  home to foreclosure. 

Please be advised that if your mortgage payments are being made via conduit, you will resume making direct monthly mortgage payments after your plan is completed.

***TIP: Many insurance companies give a lower rate if you have both your homeowners insurance and your car insurance with the same company.

Is my car payment included in my plan?

Almost without exception, your vehicle(s) will be included in your plan.  Depending on the purchase date, your vehicle will be valued one of two ways:
1)	You will be required to pay the full amount you owe on your vehicle.
2)	A fair “value” will be assigned to the vehicle and that amount will be considered a secured debt.  Interest will be paid only on the secured portion of the debt as per the plan.  
Regardless of valuation, it is extremely important for you to maintain adequate insurance on your vehicle.  

Please note that the Trustee’s office does not hold titles to any vehicles.  If you have any problem obtaining a car title after your vehicle has been paid through the plan, you need to contact your attorney.

How will the IRS view my Chapter 13 plan?
             
If you owe the IRS a debt upon entering the plan, that debt must be paid through the plan and is classified as secured, priority or unsecured depending upon the circumstances.  (Check with your attorney as to the classification that applies to your particular debt.) 

While in the plan, you must file your tax returns in a timely manner each year.  If you have an IRS debt in the plan, and are owed a refund for the current filing period, you MIGHT NOT receive a refund.  That amount may be retained by the IRS and credited to your IRS debt.  If so, the Trustee will adjust your IRS balance in the plan.

If you do not owe the IRS in the plan, you are current in your plan payments to the Trustee’s Office and you are due a refund, you probably WILL receive that refund. It will be sent to you, not to the Trustee. You will not, however, be eligible for an electronic refund.  Because 
of your Chapter 13 status, the Special Procedures Department handles all your transactions, causing any refunds to be delayed by several weeks. 

Any post-petition taxes owed to the IRS must be paid.  Failure to do so could lead to the dismissal of your case.  The number for the IRS Special Procedures Department is (513) 263-3216.

***TIP:  Talk to your attorney about the number of exemptions you claim on your tax returns.  You might want to consider claiming the maximum number allowed in order to more amply fund your budget.  

	Will my co-signers be protected by my Chapter 13 plan?		

A co-signer, co-maker or guarantor (co-debtor) on any of your personal debts is generally protected by a “Co-debtor Stay” which extends to them the same protection from creditors as you have. If that person has given collateral for the loan, the creditor must request the court for relief from the automatic stay in order to proceed against the property.  The co-debtor stay will only provide protection for the amount of the debt your plan proposes to pay. If your plan is not scheduled to pay the co-signed debt in full, a creditor may obtain permission to collect the unpaid portion of the debt from your co-signer, co-maker or guarantor. Your discharge on a debt is personal to you and does not necessarily affect a co-signer’s obligations.

If you have any questions about whether or not any co-signer on a debt is protected under the terms of your plan, make sure you talk to your attorney about their treatment in the plan.

	What about credit use while I’m in the plan?
                     
Any use of credit or charge cards, or entering into a loan agreement of any kind is prohibited by the Court.  This applies to any family member that you support, even though they are not a party to your Chapter 13.

In emergency circumstances or if a unique need for credit use arises, contact your attorney to submit an Application to Incur Debt which the Trustee will take into consideration.  The Trustee will decide if the request has merit and is affordable.  Pursuing credit without the Trustee’s permission may jeopardize your Chapter 13 case and could lead to dismissal.

	May I buy any property while I’m in the plan?
             
All of your disposable income is considered part of your bankruptcy estate and must be committed to the plan for the first 36 months.  You cannot buy any major purchase without first obtaining the Trustee’s permission.  This includes refinancing. Your attorney must submit the appropriate paperwork asking the Trustee to consider your request.   

	May I sell any of my property while I’m in the plan?	 

All of your property is considered part of your bankruptcy estate.  You cannot sell any major part of that estate, including, but not limited to, your home, car, land, fine art or jewelry without the permission of the Court.  Your attorney must submit the appropriate paper work asking the Court to consider your request to sell property.

	May I continue making contributions to my 401(k)?	 

Yes, contributions to both mandatory and voluntary retirement programs are allowed.  It is also permissible to repay loans from your retirement account. 

If you have any questions, please talk to your attorney. 

Will I get payment statements from the Trustee?

Each April and October you will receive the Trustee’s Semi-Annual Report* that gives an accounting of the money you have paid into the plan and how your creditors have been paid.  It will show the balance of all accounts being paid through your plan.  Your attorney also receives a copy of the report.  If you have any questions concerning the report, contact your attorney.
 
TIP: It is imperative to keep ALL documents received during the term of your plan.  You will NEED these to re-establish credit in the future. Keep these in a safe place—you will need to refer to them for at least ten years after the completion of your plan.

*See Appendix, p. 3.

May I pay off my plan early?

If you want to pay your plan off early, you must first write the Trustee’s Office requesting a payoff. Your letter should also disclose the source of the funds you are using to pay off your plan.  This information is required to ensure your compliance with bankruptcy and disclosure rules. Before you are given a payoff, your entire file must be reviewed.  This can be a lengthy process so your patience is greatly appreciated.  Your request WILL be processed as quickly as possible. 

All cases are subject to a final review and approval of the Court. Be aware that this could take as long as two months to receive.

       		
	What does it mean to have my case dismissed?

A case may be dismissed either voluntarily, meaning that you decide to stop your participation in the plan, or involuntarily, meaning the Court has terminated your plan usually because of failure to maintain timely payments.  You have the right to exercise a voluntary dismissal at any time by notifying your attorney.

Fixed and timely Chapter 13 plan payments are a requirement of the Court and it is your responsibility to maintain those payments.  A deficiency in plan payments for any forty-five (45) days could result in the involuntary dismissal of your case.  Either the Trustee or a creditor may file a Motion to Dismiss with the Court and you and your attorney will be notified of the action.

If your income is reduced, hindering your ability to continue in the plan, contact your attorney immediately.  He or she may be able to modify your plan in order to prevent your being considered delinquent.  The Trustee’s Office has no authority to let you miss a payment or to allow you to pay less than the required amount.  Only the Court can do so in response to a motion filed by your attorney.  If your attorney files such a motion, do not change or stop payments until you receive a signed order from the court allowing you to do so. Be aware that this could take up to 30 days.

In the event of a dismissal, either voluntary or involuntary, all creditor stays will be lifted and creditors can resume recovery procedures on accounts and may add any interest and penalties that were waived under your Chapter 13 plan.

IT IS IMPORTANT FOR YOU TO IMMEDIATELY OPEN ANY MAIL YOU RECEIVE FROM YOUR ATTORNEY, THE COURT, OR THE TRUSTEE’S  OFFICE.

What happens when I complete my plan?

When the Trustee and the Court have verified that all your creditors have been paid as confirmed in the plan, the Trustee will notify your employer to stop the payroll deduction. The Trustee compiles a list of completed cases once a month.  Every effort is made to stop the deductions promptly.  If, however, an unnecessary deduction is taken, it will be refunded to you as soon as possible.  Any overpayment on your case will be released after your case is discharged.  Any final refunds will be issued approximately thirty-five (35) days after you receive your FINAL REPORT.*

A FINAL REPORT AND ACCOUNT must be submitted to the Court for auditing before your case can be closed.  Auditing usually takes four to six weeks.  You will receive a copy itemizing all money transactions, receipts, claims filed, and amounts of disbursements. You will receive an Order of Discharge** from the Bankruptcy Clerk and a copy of your Final Report. Your creditors will receive a notice that the final report was filed.  These are very important documents that you should keep in a safe place indefinitely.

*See Appendix, p. 4.
**Appendix, p. 5.
What happens to any debts that are not paid in full?

If your unsecured creditors did not receive the entire amount originally owed to them, all remaining balances will be “discharged” or legally forgiven upon the completion of your plan.  Creditors cannot resume collection activity on these debts.

Unique debts contained in your plan that cannot be discharged include student loans, child support obligations, fines created as a result of your causing injury while under the influence of drugs or alcohol.  You will be responsible for any balances due on debts of these types after the completion of your plan.  Consult with your attorney if you have a specific question about a particular debt.

What about debts paid in full after completion of the plan?

When a creditor has been paid in full through the plan, the creditor may, upon your request, send the “paid in full” papers to you.  Court records will officially show your plan was paid in full according to its terms and will overrule any claim the creditor might make for additional money from you.  Should you receive a request for additional money after your plan completes, review the matter with your attorney.
How long will my bankruptcy filing be reflected in my credit report?

If you successfully complete your Chapter 13 bankruptcy and receive a discharge, the fact that you filed will be reflected on your credit report for 7 years from the filing date of the petition.  If your case is dismissed or converted to another chapter of bankruptcy, it will remain on your credit report for ten years.

	Is there life after debt?       		
   	 	
ABSOLUTELY! Completing a Chapter 13 plan is an accomplishment of which you will be proud, and rightfully so.  This Trusteeship strongly believes in providing learning opportunities for you while it serves as a channel for your debt repayment.   Hopefully you will take advantage of the Trustee’s money management classes and use this time wisely so that your budgeting skills will be greatly improved by the time you complete your plan.

While the Trustee does not encourage you to establish new credit when your plan is completed, he realizes that you may need the availability of credit at some point in your financial future.  Credit re-establishment information will be provided through our voluntary Debtor Education Seminars.

The Trustee has identified creditors who appreciate the efforts of Chapter 13 “graduates” and are willing to extend to them reasonable amounts of credit at reasonable rates.  These creditors are most cooperative with debtors who have completed 100% plans or high percentage plans.  In other words, the more of your total debt that you are able to repay, the greater your chances of having a smooth transition into establishing new credit. After your case has been fully 

administered and the Court has discharged your case, the Trustee will send a letter congratulating you and also a letter informing the credit bureau(s).  If you should have any questions regarding your credit or you would like to participate in our classes, please contact Kathleen Mills at (614) 436-6700, ext. 111.

Hello and welcome,

        The Debtor Education Program of the Chapter 13 Trustee’s Office is committed to offering support to you during your Chapter 13 Plan and in re-establishing your credit at the Plan’s completion.  As part of that process, the Office of the Chapter 13 Trustee offers a series of four consumer seminars.  The seminars and materials are free of charge to debtor(s) currently participating in a Chapter 13 Plan.  The seminars are held at the Trustee’s Office in Westerville, Ohio, usually on Thursday evenings and Saturday mornings.  Day sessions can also be arranged.
     
        A sample of the topics covered is:

Chapter 13 Process: what’s important to know about your Plan; important documents to keep and which documents mean trouble; how your debts are paid through your Plan; classification of your debts and introduction to Trustee’s website.

Planning and goal setting: understanding money messages and how they influence your spending; making choices about needs and wants; making a written plan to achieve your goals; tracking expenses.

Budgeting and money management: preparing an actual budget from your income and expenses to help keep finances under control.

Consumer information and fraud prevention: guest speaker from Ohio Attorney General’s Office with valuable information on Ohio law, advertising and sales techniques.

Credit reports and credit lending: reading and understanding credit reports; getting rid of wrong information; understanding real cost of credit; different kinds of credit; terms of a loan; how to start to rebuild credit.

Past participants of the seminars generally rate them as very helpful. There is a question and answer period every session and questions can be submitted anonymously. Other benefits result from group contact with others in the same situation, contact with experts in money and consumer matters, on-going guidance throughout the Plan and contact with credit lenders.

        Upon completion of the seminar series, a certificate is awarded.  Debtor(s)’ participation in the seminars is noted in debtor(s)’ file at the Trustee’s Office and notification is given, upon request, to creditors for future credit re-establishment.

         I look forward to working with each of you and encourage you to sign up for the seminars.  Together we can learn from each other and make this time in your life as stress free and productive as possible.  Please call me at 614-436-6700, extension 111 with any questions or comments, or just to say hello.

                                                                                         Sincerely,  

                                                                                       Kathleen Miller                    

   

NOTES

                                        
 NOTES

Glossary

341 Meeting- Also called a Meeting of Creditors.  This is a tape recorded meeting between the debtor, the trustee, the debtor’s attorney, and creditors at which the debtor is questioned under oath about the debtor’s assets, liabilities, income, expenses, and the debtor’s proposed repayment plan.  Debtors are required by law to attend.  They must provide a picture I.D. and social security number, usually a driver’s license, before the hearing can take place. They may also be required to bring certain other information or documents.  If so, they will be advised by their attorney.

Adversary Proceeding- A separate lawsuit filed in the bankruptcy court concerning a dispute which arises in or is related to the bankruptcy case and involves opposing parties.  A debtor who is served with an adversary complaint should immediately contact his or her attorney.  A written answer (a legal document) must be filed promptly and served on the parties to the adversary proceeding to avoid a default judgment.

Appeal- A request to a higher court to review a decision of the bankruptcy court.  A notice of appeal (a legal document) must be filed shortly after entry of a final order or judgment.
 
Assets- Real or personal property such as land, houses, vehicles, furniture, clothes, bank accounts, retirement accounts, tax refunds, claims against others, etc.

Automatic Stay- An automatic court order requiring the halt of all collection activity on pre-bankruptcy debts.  The automatic stay goes into effect upon the filing of the case.

Bankruptcy Estate- In Chapter 13, all assets belonging to the debtor at the time the bankruptcy petition is filed along with income the debtor earns after filing the petition.  (A spouse’s income or property may be part of the bankruptcy estate, and some property, such as inheritances, divorce settlements and life insurance due within 180 days of the petition date may also be part of the bankruptcy estate.)

Bar Date- Deadline for an unsecured creditor to timely file a claim for payment from the bankruptcy estate.  It is 90 days after the first date set for the meeting of creditors.  Governmental units such as the IRS have 180 days from the petition date to file a claim.  The debtor has 30 days longer to file a claim for a creditor that has not filed a claim.

Base Plan-A Chapter 13 Plan in which the dividend to unsecured creditors is less than 100%.  

Chapter 7- This chapter of the Bankruptcy Code permits debtors to request a discharge for a surrender of or sale of all debtors’ non-exempt assets.  A trustee is appointed to collect and sell all the debtors’ non-exempt assets and distribute the net proceeds to creditors.  The Chapter 7 discharge is more limited than the Chapter 13 discharge.

Chapter 11- This chapter permits a business or corporate debtor to reorganize and restructure their debts.  This chapter may be used by an individual debtor.

Chapter 12- This chapter may be used by family farmers to reorganize and restructure their debts.

Chapter 13- Chapter 13 allows an individual debtor (and spouse) to propose a plan to pay creditors.  Unless it proposes to pay 100%, a plan must last at least 36 months and may be no longer than five years.  The percentage of payback may range from 0% to 100%.  An individual is not eligible to file a Chapter 13 case if they have unsecured debts of  more than $290,525.00 or secured debts of more than $871,550.00.  (These limits became effective on April 1, 2003, and adjust again every three years thereafter.)

Co-Debtor- An individual who signs a note or contract with a debtor or guarantees a debtor’s debt.

Co-Debtor Stay- This is an automatic stay which protects persons who did not file bankruptcy but who are liable on the same consumer debt along with the debtor.  Joint cardholders or co-signers of a debt are protected by the co-debtor stay, but only to the extent the debtor’s plan proposes to repay the debt, including interest at the contracted rate. In order to protect the co-debtor, the co-signed debt must be paid in full at the contract rate of interest. This co-debtor protection is available only in Chapter 13 cases.		

Collateral- Property pledged as security for the payment of a debt.

Confirmation- The official act of the bankruptcy court approving a Chapter 13 re-payment plan.

Co-Signed Debt- Debt for which more than one person is legally responsible.

Conversion- Changing a bankruptcy case from one chapter to another.

Court- The United States Bankruptcy Court in which a case is pending.  Sometimes the bankruptcy judge is called “the court.”

Cram Down- Also known as “lien stripping.”  It is the process by which a creditor’s secured claim is split into a secured and an unsecured amount with the secured portion equal to the value of the collateral and the unsecured portion being the balance of the claim.  The creditor ends up with two separate claims that may be treated differently under the plan.

Credit Grantor- One who gives a loan or line of credit; also referred to as the creditor.

Cure Defaults- Bring bills that were past due current and up to date during the term of the plan.

Debt-  Money that is owed to another.

Debtor- A person or entity who owes a debt.  A person or entity who files a bankruptcy case.

Default- Not doing precisely all that is agreed to within a given time, such as not making a plan or house payment.

Delinquent- Overdue, not paid on the agreed due date.

Deposition- The recorded testimony of a witness under oath taken some place other than the courtroom.  A similar procedure is known as a “2004 Examination.”

Discharge-  Discharge of debts is one of a debtor’s goals in a bankruptcy filing.  All of the debtor(s)’ dischargeable debts become legally non-collectible by any creditors, unless a specific debt is a non-dischargeable debt or is determined to be non-dischargeable by the court, upon entry of a court order called the discharge.  A discharge order operates as a permanent court order prohibiting the collection of any dischargeable pre-petition debt.

Discovery- The legal process by which one party gives needed information or documents to another party prior to a trial or hearing through interrogatories, requests for the production of documents, requests for admissions, and/or depositions.

Dismissal- An order ending the bankruptcy case before successful completion and discharge.  This order allows creditors to restart legal actions for collecting the debt involved in the bankruptcy.  A case may be 

dismissed voluntarily by a debtor or by the court.  It may also be dismissed on motion of the Trustee or a creditor, for good reasons, such as failure to timely pay Chapter 13 plan payments, attend the 341 meeting, or file complete information with the court.

Disposable Income- Money the debtor has available that is not required for reasonable living expenses of the debtor or dependents of the debtor.

Escrow- An account held in trust or as security.

Estate- All that a person owns, including both inheritable and movable (property that can be moved or displaced, such as personal property) property. 

Exemptions- Certain property belonging to a debtor not counted as part of the bankruptcy estate.  Under the Bankruptcy Code, the debtor is allowed to keep certain property in order to have a “fresh start.”  Each state is allowed to create its own exemptions.  In some states, the debtor may have the option to choose which exemptions will be followed, either the exemptions designated by the state in which the debtor resides or the federal exemptions set forth in the Bankruptcy Code.  An exemption usually does not affect an agreed to lien.  So, even though a debtor’s house or car may be exempt, unless the lien is legally voided by the court, the debtor still must pay any debt secured by such lien in order to keep the property.

Fair Market Value- The price at which a seller is ready and willing to sell and a buyer is ready and willing to buy on the open market and in a transaction where the parties are not related or not on close terms and have roughly equal bargaining power.

Feasibility- Likelihood that all payments due under a debtor’s Chapter 13 plan will be paid.  It is a requirement for court approval (confirmation) of a plan.

Foreclosure- Takes away the debtor’s ownership rights in pledged or mortgaged property through legal action which produces money to pay on the debt secured by the mortgage.

Fraud- A false statement of an important fact intentionally made by a debtor to a creditor who justifiably relies on the statement and is harmed as a result.

Guarantor- Person who promises to repay a debt made by another.

Insolvency- The inability of the debtor to pay current bills as they become due or when a debtor’s liabilities exceed the value of the debtor’s assets.

Interrogatories- Written questions that must by law be answered in writing under oath.  The answers can be used as evidence later in court.  A fine may be charged by a court for willfully refusing to answer timely.

Involuntary Chapter 7- A liquidation bankruptcy case filed by creditors against a debtor.

Joint Bankruptcy- A single bankruptcy case filed by a married couple.

Jurisdiction- Geographical region where a court is located.  Also refers to power of the                               court to issue legally binding orders.
	
 Liability-  A debt.

Lien- A creditor’s right to property of a debtor.  i.e. Mortgage or security interest.
	
Liquidation- Selling assets for cash to use to pay creditors.

Luxuries- Items of property that provide pleasure or comfort but are not reasonably necessary to support a debtor and a debtor’s dependents.

Matrix- List of names and addresses of each creditor arranged in a particular order on a page.

Meeting of Creditors- See 341 Meeting

Modification of a Plan- Changes to a plan filed in a Chapter 13 bankruptcy.  Once a plan is confirmed the plan may only be modified with the court’s approval after notice to affected parties.

Motion- A formal request to a court for an order to allow or require a specific action.

Necessities- Items of property or services that are required for living a normal life without being excessive.  For example, food, clothing, shelter, etc.

Non-dischargeable debt- Certain debts not covered by the debtor’s discharge, including IRS debt, alimony, student loans, criminal fines and restitution, and debts for any drunk driving violations.  If a debt is non-dischargeable, legal collection activity can resume regarding the debt after the case is over.

Objection to Claim- A pleading (a legal document) filed by the debtor, debtor’s attorney or trustee that disagrees that the debt is owed or that the amount claimed is correct.

Offset- Crediting a debt owed by party “A” to party “B” against a debt owed by party “B” to party “A.”  An example is when the IRS keeps all or part of a debtor’s tax refund to pay certain taxes owed by the debtor to the IRS.

Order- A formal ruling by a judge allowing or requiring a specific action or deciding a disputed matter.

Periodic- Occurring at regular times, usually monthly, quarterly, semi-annually or annually.

Perjury- Lying under oath.  Perjury can be a false oath orally, such as during the meeting of creditors, or in writing in the schedules.

Petition- The two-page document filed with the bankruptcy court used to begin a bankruptcy case.  Other documents (such as schedules of assets, liabilities, income and expenses, statement of financial affairs, statement of intention, etc.) are often attached or must be filed in the bankruptcy court within 15 days, or some other time as permitted by a court order.

Petition Date- The date the bankruptcy petition is filed with the bankruptcy court clerk.

Post-Petition- Any event occurring after the petition date.

Post-Petition Debts- Any debt created after the filing of the petition in the bankruptcy court.  Post-petition debts may not be dischargeable or protected by the automatic stay.

Pre-Petition Debts- Any debt which exists at the time of filing your bankruptcy petition.

Preference- A pre-petition payment to a creditor which allows the creditor to receive a greater percentage of their debt than that received by similar creditors.  The trustee may require the creditor to give back certain preferential payments, so that the money can be divided equally among all similar creditors.

Presiding Officer- The trustee or a representative of the trustee who conducts the 341 meeting.

Priority Debts- Unsecured debts that must be paid in full under a Chapter 13 plan.  Such debts include trustee fees, debtor(s)’ attorney fees, certain income taxes, and alimony and child support.

Pro Per or Pro Se- A debtor filing bankruptcy without being represented by an attorney.

Property- See assets.

Pro Rata Basis- Divided proportionally.

Proof of Claim- A form used by creditors to file a claim in order to receive payment from the bankruptcy estate.  The debtor or trustee may file a proof of claim for a creditor who does not do so.

Relief from Stay- In certain situations, a creditor may obtain an order for relief from the automatic stay to allow it to enforce its claims, pursue collections against a debtor, or conduct any other activity that would otherwise violate the automatic stay.  When an order for relief is granted by the court (sometimes called “lifting” the stay), the automatic stay protection is canceled as to the particular debt involved.

Restitution- An obligation to pay a debt usually ordered by a criminal court and usually payable to the crime victim, resulting form a criminal conviction or plea bargain.

Sanction- A penalty, usually a money fine, against a party or their attorney for violating a bankruptcy court order.

Schedules- Written information given by the debtor and filed with the bankruptcy court on the day of filing of the bankruptcy petition or within 15 days thereafter.  These forms provide financial information about the debtor and must be completed under oath.  These schedules include a list of assets and liabilities, a schedule of income and expenses, and a statement of financial affairs.

Secured Creditor- A creditor who has a lien on property.

Sole Proprietorship- A business owned by an individual that is not a corporation or a partnership.

Solvency- The ability to pay all debts and just claims as they come due.  Simply stated, debtor’s assets are more than his liabilities.  When a debtor’s Chapter 13 case is deemed solvent, debtor is required to pay all his creditors a 100% dividend with interest.

Special Class- An unsecured claim or claims which the law allows to be treated differently than other unsecured claims, for example, some co-signed debts.

Stay- See Automatic Stay

Substantial Abuse- The court may dismiss a Chapter 7 bankruptcy case on the motion of a U.S. Trustee or a U.S. Bankruptcy Administrator if the debts are mostly consumer debts and if the court believes that the Chapter 7 petition represents an improper use of the Bankruptcy Code.  (See Section 707(b) of the Bankruptcy Code.)  A factor considered is the debtor’s ability to repay a significant portion of their debts in a Chapter 13 case.

Subpoena- A formal document, usually issued by a court, requiring specific action, such as an appearance at a particular time and date.  Failure to obey a subpoena may result in a fine or other punishment for contempt of court.

Summons- An order to file a written answer (a legal document) to a lawsuit or adversary proceeding within a specified time.

Trustee (Chapter 7)- A person appointed to take charge of the non-exempt assets of a debtor and sell them to pay creditors.

Trustee (Chapter 13)- A person appointed to collect payments from the debtor or debtor’s employer and pay them to creditors during a 3 to 5 year period pursuant to a court approved (confirmed) plan.

U.S. Bankruptcy Administrator- A governmental entity that monitors the administration of bankruptcy cases in certain states.
	
U.S. Trustee- A governmental entity that monitors the administration of bankruptcy cases in certain states.

Unsecured Creditor- A creditor whose debt is not secured by property or collateral.  This would include credit card debts.

APPENDIX

****SCAN ALL DOCUMENTS SENT BY THE TRUSTEE’S OFFICE TO DEBTORS. INCLUDE MARGIN NOTES SO THAT DEBTOR(S)’ CAN BETTER UNDERSTAND WHAT IT IS THEY ARE RECEIVING.  ALSO INCLUDE CROSS-REFERENCES TO THE FAQ’S AND A SHORT EXPLANATION OF THE FORM AT THE TOP OF THE PAGE.

FOR EXAMPLE, THE TRUSTEE IN COLUMBUS USES THE FOLLOWING EXPLANATIONS OF HIS FORMS:

A WAGE DEDUCTION ORDER, signed by the Bankruptcy Judge, will be issued to your employer. Your employer will then make your payment for you by deducting equal amounts of money from EACH PAYCHECK and sending that money to the Trustee’s lockbox. Note that your payment is deducted in equal installments, not in one lump sum. .
***For more information, reference pages 2 & 3 of the FAQ’s.

The NOTICE OF INTENTION TO PAY CLAIMS  has a 20 day period from the date of service by the Trustee, during which objections can be filed by you or by creditors.  With rare exception, if there are no objections, the case becomes final and binding, paying only those creditors who have filed claims. For this reason, it is very important for you to review this document as soon as you receive it.  If you owe on a mortgage or car payment and that debt is not listed, please contact your attorney immediately.
*For more information, reference page 6 of the FAQ’s under the question, “Why do creditors have to file a proof of claim with the courts?”

Each April and October you will receive the Trustee’s SIX-MONTH REPORT that gives an accounting of the money you have paid into the plan and how your creditors have been paid.  It will show the balance of all accounts being paid through your plan. Review this document carefully and make sure that the Trustee’s Office has accounted for all the payments you have made into the plan.  If there is something that you do not agree with or something that you think is wrong, please contact your attorney immediately. 
*For more information, reference page 9 of the FAQ’s under the question, “Will I get payment statements from the Trustee?”

A FINAL REPORT AND ACCOUNT  must be submitted to the Court for auditing before your case can be closed.  Auditing usually takes four to six weeks after which you will receive a copy itemizing all money transactions, receipts, claims filed, and amounts of disbursements. This is a very important document that you should keep in a safe place indefinitely. It serves as a type of “receipt” listing everyone that has been paid through your plan.
*For more information, reference page 10 of the FAQ’s under the question, “What happens when I  complete my plan?”

Once your final report is filed with the Court, you will receive an ORDER OF DISCHARGE from the Bankruptcy Clerk if no objections are filed. This document operates as a permanent Court Order prohibiting the collection of any dischargeable pre-petition debt. 
*For more information, reference page 10 of the FAQ’s under the question, “What happens when I complete my plan?”