Frequently Asked Questions about Filing Personal Bankruptcy in
Michigan
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.
Top of Page
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.
Top of Page
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