Paying the Chapter 13 Trustee

While most Chapter 13 payments will be made to the Chapter 13 Trustee via wage attachments or bank attachments, some payments will be made directly by the debtor on their own.

Typically, this occurs at the beginning of the case before the wage attachment takes effect, or when the debtor is transitioning between jobs. This post describes how to make these direct payments.

All payments to the Chapter 13 Trustee must be mailed via normal mail to the following address (NOTE: Do NOT use any form of mail that requires a signature from the Trustee, such as certified mail, as the Trustee will NOT accept it.):

Ronda J. Winnecour

P.O. Box 1132

Memphis, TN 38101-1132

Payments will only be accepted by the Chapter 13 Trustee if they are money orders or certified checks... personal checks and cash will NOT be accepted. 

Your money order or certified check should include your bankruptcy case number, which will be in the form of 16-12345 (year the case was filed, dash, and then five digits). Keep a record of your payment in case it is lost in the mail or otherwise mishandled.

Your first payment will become due 30 days after your case is filed (otherwise, your case will be dismissed). Typically, you will stop making the payment directly when you see the wage attachment come out of your paycheck, or the bank attachment come out of your bank account. But, always verify this with your attorney. Missed payments could result in the need to increase your plan payment to catch up, or in a worst case scenario, the dismissal of your case.

So, to summarize, here is everything you need to know about mailing your payment directly to the Chapter 13 Trustee when your attorney advises you to do so...

  • Mail (regular mail)  to Ronda J. Winnecour, P.O. Box 1132, Memphis, TN 38101-1132
  • Money orders and certified checks ONLY, no personal checks or money orders
  • Remember to write your case number on your certified check or money order
  • The first payment is due 30 days after the filing of your case

If you have any questions about your bankruptcy payment, contact us immediately.

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Keeping Your Car in Bankruptcy

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One of the most common fears of people considering a bankruptcy filing is that they will lose their car. For many of my clients, this is absolutely not an option, as they need their car to get to work, pick up their kids, and run errands.

Well, good news... as long as you can afford to keep it, you will NOT lose your car! The bankruptcy code recognizes the importance of cars in everyday life, and has accounted for it. You can absolutely file bankruptcy AND keep your car.

First, Federal bankruptcy exemption law provide an exemption of $3,675.00 for each bankruptcy filer (both husband and wife in a joint filing). This protects the value in your car(s) from creditors you owe money to. If property is exempt, they can't touch it. Now, there is a very good possibility your car is worth more than $3,675.00; however, the exemption need only be used towards the equity you have in the car. Equity is the value of the car MINUS what you owe. This amount is often less than the exemption amount, as cars lose value very quickly. In addition, there is an additional "wild card" exemption that normally covers any equity above the $3,675.00 limit.

Chapter 13 bankruptcy will even allow you to keep a car that you are behind payments on. You can catch up significant arrears through a 3-5 year Chapter 13 plan, and it is quite often used to help individuals who fell behind on a car payment due to temporary loss of job or other financial issue. The arrears are caught up over the course of the plan, with is normally quite affordable, while allowing continuing use of the car.

I did mention earlier that you can only keep a car you can "afford". There are some limitations on keeping your car in bankruptcy. The greatest limitation involves Chapter 7 and delinquent car payments. You can NOT keep a car you are behind payments on in a Chapter 7 bankruptcy. I will often advise clients who qualify for a Chapter 7 bankruptcy, yet owe back payments on a car, to catch up with the payment before filing the Chapter 7. If this is not possible, we will consider filing a Chapter 13 bankruptcy reorganization. Either way, I always tell my clients I am not in the business of having them lose their car... if there is a way to keep your car (no matter how desperate your situation), I will figure it out.

All this being said, through the exemption rules and general policy, bankruptcy law is designed for you to keep your car. People often erroneously believe they will lose their car, and refuse to consider a bankruptcy that could be hugely beneficial. Don't let this misplaced belief limit your financial options.

Contact us if you are having issue with a car payment or wish to discuss your financial issues in a free consultation.

New Year, New Start

New Year's Day is a day for looking back, but also a day for resolutions and fresh starts. New Year's resolutions need not be related to dropping weight or working out. You can also resolve to fix your finances.

Credit card debt, late payments, missed bills... they can all add up to wear you down and break your spirit. But, this doesn't need to be the case. It might not seem like you have options (credit card companies don't want you to think you do!), but you do. Just a few options at your disposal:

  • Chapter 7 bankruptcy- if you qualify, it wipes out most types of debt (credit cards, medical bills, payday loans, creditor lawsuits, etc) AND allows you to keep ALL of your property!
  • Chapter 13 bankruptcy- a bankruptcy reorganization, Chapter 13 provides lots of options. You can pay back taxes, catch up a mortgage deep in arrears, pay credit cards at 0% interest. It's a great way to get your finances in order with Court protection.
  • Debt settlement negotiations- I can also negotiate directly with your creditors. They know I can file a bankruptcy, so they are a lot more open to listening to my offers than your own experience with creditors would make you believe.

There is no reason to let your finances and debt weigh on your thoughts going into 2016. The law is often on your side, so use it! You can be feeling the relief you have been hoping for before the weather turns warm.

I always offer a free, in-person consultation. Contact us to set one up today. I'm an experienced Pittsburgh bankruptcy attorney who has helped countless people just like you. I'm happy to listen, discuss, and plan with you. Let's make 2016 a happier, financially healthier, year for you!

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What is a Dischargeable Debt?

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When considering a bankruptcy, you will often hear your attorney refer to "dischargeable" debts. It's important to fully understand what the term means, because discharging your debt is the primary purpose of filing a bankruptcy.

A debt is dischargeable when bankruptcy can essentially eliminate it, or make it go away. The most common types of dischargeable debt are credit cards, medical bills, unsecured loans, and personal loans. Federal Income Taxes are sometimes dischargeable (if they were filed on time and are more than three years old), but in most cases taxes are not dischargeable. Student loans and government fines are rarely dischargeable.

When are your debts discharged? Debts are discharged when all the steps of your bankruptcy are completed. In a Chapter 7 bankruptcy, this happens relatively quickly, within 3 or 4 months of filing. A Chapter 13 bankruptcy takes much longer... the plan itself will be 3 to 5 years long, and the official discharge will take months longer.

The good news is, as long as you are complying with your bankruptcy requirements, the automatic stay prevents creditors from attempting to collect on your debts. So, in the time between filing and discharge, you will be protected from your creditors.

Why are some debts dischargeable, while others are not? The policy of Congress, as manifested through the United States Code,  largely determines what is discharged and what isn't. Congress has determined credit cards can be discharged... usually. If you used your credit cards to pay taxes or make a large purchase right before filing bankruptcy, they are NOT discharged.

Congress has taken the policy stand that student loans, whether Federal or private, are NOT dischargeable, except under the most extreme circumstances. It can be argued that a student loan is a debt not much different than a credit card. They both can be used to purchase services or goods. Both can prevent a debtor from enjoying the "fresh start" promised through bankruptcy. But, at least for now, Congress has taken the policy stance that student loan debts will survive through bankruptcy, to the point where your wages (or even Social Security benefits!) can be garnished.

Taxes and student loans involve money originating from or directed to the Federal government. So, maybe it should be no surprise that Federal bankruptcy law demands that they be repaid in full. For debtors facing financial hardship, relief is often denied. Unfortunately, the bankruptcy "fresh start" is not a reality for may debtors.

Contact us to meet with an experienced Pittsburgh bankruptcy attorney who can discuss which of your debts can be discharged, and what to do about those that cannot.

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What Can Delay a Bankruptcy Filing?

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You have discussed filing bankruptcy with your attorney, and it seems like the right course of action. You're ready to go.

But, sometimes you need to wait...

Several issues can make it preferable, or even necessary, to wait before filing either Chapter 7 bankruptcy or Chapter 13 bankruptcy. Faster and sooner is not always better.

The first issue may involve securing the proper venue to file. You can only file in a location where you have lived for a majority of the past 180 days. So, if you have not lived in Western Pennsylvania for the past 91 days, you cannot file here in Pennsylvania. Oftentimes, it is worth waiting, as filing in your new home will be much more convenient than commuting to your old state. But, it is a requirement that is absolute.

It may also be advisable to wait to file for purposes of exemption planning. The Court will look back at your domicile (where you lived) for a period of 180 days starting two years back from the date of filing. Sound confusing? It is! But, it will be discussed in another post, and your bankruptcy attorney can walk you through it. The relevant point for right now is that sometimes it is advisable to wait before filing to change the available exemptions. An experienced bankruptcy attorney will help you with this "exemption planning" to maximize the protection of your property.

Means test planning will likewise play a role in the timing of a bankruptcy filing. The means test looks at your income for the six months before filing. Depending on your employment history, the means test calculation may require a delayed (or expedited) filing. The means test is also discussed in greater detail elsewhere on the website.

A previous bankruptcy discharge can delay a new filing, as well. This will most often be the case when the debtor has previously filed a Chapter 7 bankruptcy. These debtors will not be eligible to file a new Chapter 7 bankruptcy for 8 years since the previous Chapter 7 was filed. Speak with your bankruptcy attorney about strategies for dealing with creditors during this time. 

Finally, making payments to your bankruptcy attorney for legal fees and filing fees may delay your case from being filing. I am always flexible in taking payments and devising payment plans for my clients. However, bankruptcy attorneys will not file a case before being paid in full, otherwise their fees will be discharged with the other debts. But, my office will provide clients with full and professional service during the duration of the payment plan. I will have the petition ready to file at the moment of the final payment.

The timing of bankruptcy is all-important. Contact us to discuss the issue with an experienced Pittsburgh bankruptcy attorney.