In a Chapter 13 bankruptcy, you'll make payments to the bankruptcy Trustee. These are the payments that the Trustee divides up and forwards to your creditors and it keeps you from having to make separate payments on any debts that are included in your Chapter 13 Plan (although you do separately pay whatever debts are not included in your Plan). The amount of each payment is set out in your Chapter 13 Plan.
Chapter 13 is complicated, so there are a ton of things that are bound to go wrong. Lots of them are nobody's fault, stuff just happens. The good news is that your bankruptcy lawyer can fix most of them, and negotiate away some of the others for you.
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Your bankruptcy case, however, is a cooperative process. Your bankruptcy lawyer does some parts, and you do other parts. One of the things that your bankruptcy attorney cannot do is make sure your Chapter 13 payments are made on time.
That's your job.
Missing your Chapter 13 payment causes more problems than anything else, especially in cases that would otherwise be successful. Even though both your attorney and the bankruptcy Trustee spend extra effort emphasizing how critical it is to keep your Chapter 13 payments current, accidents are bound to happen.
Here's what you have to remember:
First, you are the one whose job it is to make sure the Trustee receives your payments. In Dallas, your payments should be made by payroll deduction or auto-debit. It is way simpler for you that way, but you must be proactive in making sure that the company you work for is sending the money in like they are supposed to be doing. If you get to the confirmation hearing and all of your payments have not yet been made, your case will get dismissed. There are times when the Trustee's internal records show a delinquency, even though you think the funds were taken out of your paycheck. If you think that your employer is holding out the money but it has not been sent in yet, speak up. If you get your paycheck and notice that your employer is not taking the money out, you have to go talk to the payroll person at your company.
Second, keep in mind that your Trustee payments start immediately but until the payroll deduction kicks in, you must physically send your payments directly to the Trustee. The first due date for a case in Dallas will be 30 days after the day we filed the bankruptcy case. This part is extremely important: If you miss your first payment, your case will get dismissed. The first several months of the case are like a "trial period" or being "on probation" with the Trustee. That time period is where you try to prove that you are responsible enough to be allowed to do a Chapter 13, and where you and your lawyer together are proving to the bankruptcy Trustee that your Chapter 13 Plan will actually work to get you back in good standing with your mortgage company and other creditors. Bankruptcy law requires that your Plan be "feasible" and the most important part of that determination is when the Trustee takes a look at your payment history in order to see if you have demonstrated an ability to keep up with and make all your Plan payments as they are coming due. If you fall behind in your Trustee payments and don't catch them up immediately, you have doomed your own case.
Third, please ensure that any payment you submit has your full name and the court's case number written right on the front of it. Your Chapter 13 Trustee has many thousands of files to oversee and you don't want your payment delayed because it got lost in the shuffle and not matched up to your case. Most Trustees will not accept personal checks so send a cashier's check or money order and make sure that you save the receipt. Also make sure you send it to the right place. All of the Trustees in North Texas use a Memphis, TN address (which is on the initial paperwork that the Trustee sends). Since it's a PO Box, you can't send a payment via FedEx although you could use the Postal Service's Express Mail option if you are in a hurry, or certified mail otherwise. However you send it, hold onto the proof of mailing.
Finally, you can and should take the time to monitor the payments received by the Trustee in your case. Verify with the Trustee's office that your payments have been received and properly credited. All of the Trustees that I work with (Dallas, Plano and Fort Worth, Texas) have this information online so that you can log in and see what's going on in your case. If you accidentally skip or miss a payment at some point, it's vitally important to get your payments caught up before the Trustee notices the delinquency and asks the bankruptcy judge to dismiss your case.
Getting a solid Chapter 13 case going is hard on you, and a ton of work for your bankruptcy attorney. It's a shame when all that work goes to waste because of a missed Trustee payment. But with these guidelines, you should be able to minimize the risk of dismissal and maximize your chance of a successful Chapter 13 bankruptcy case.
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