RULES FOR INSURANCE PROCEEDS

•	Upon the destruction of any collateral, or if the Debtor is to obtain any insurance proceeds, the Debtor is to contact their attorney immediately.

•	If the creditor holding the lien on the collateral is being paid through the Chapter 13 Trustee’s Office, all insurance proceeds disbursed to that creditor must be paid through the trustee’s office.

•	If the plan provides for substitution of collateral, the Trustee’s office will then work with the insurance company and the lien holder to allow the Debtor to substitute collateral for the property.  The insurance company will make the check payable to the Office of the Chapter 13 Trustee.  After the lien holder releases the lien on the totaled collateral, the Debtor will be able to purchase like property with the purchase funded from the insurance check through the Trustee’s office.

•	If the plan does not provide for a substitution of collateral, the Debtor must file a Motion for Substitution of Collateral. The motion must state the amount of the insurance proceeds, the amount to be paid to the creditor(s), how the lien/title is to be processed, and how and to whom excess proceeds are to be distributed. The motion should be served on the lienholder and on the insurance company.

•	The debtor’s motion should request that the insurance company make the check payable to Donald Aikman, Chapter 13 Trustee, to expedite disbursement of the funds.

•	Upon receipt of an “Order” approving the debtor’s motion to disburse the funds and confirmation that the check has been paid, the Chapter 13 Trustee will disburse the insurance proceeds according to the Bankruptcy Judge’s order.