Chapter 13 is a long-term commitment of debt re-payment. It is very important that the debtor understands the requirements of Chapter 13 in order to successfully complete the case. The keys to success in Chapter 13 are simple:
- Debtor should hire a bankruptcy attorney because Chapter 13 is more complex than Chapter 7. Although hiring an attorney can be expensive, the incidence of successful do-it-yourself Chapter 13 bankruptcy case is low and dismissal of a case might affect the debtor’s ability to file again in the near future.
- The debtor must start making plan payments within 30 days of the bankruptcy filing, not the plan filing. The plan payment is due by the end of the month. The debtor must make regular payments to the trustee either directly or through payroll deduction.
- The debtor may not incur new debt without consulting the trustee.
- The debtor must stay current on any payments made outside of the plan.
- The debtor must timely file all income tax returns due before and after the bankruptcy filing date.
- The debtor must stay current on taxes and post-filing domestic support obligations (i.e., child support, alimony)
- Surrender tax refunds to the trustee during the Chapter 13 plan (the trustee may permit the debtor retain tax refund in certain circumstances.
- If the debtor makes the plan payments through a voluntary wage deduction order, the debtor needs to make sure all payments are made. The debtor needs to keep all pay stubs to demonstrate deductions are properly taking place.
- If the debtor is unable to make a plan payment due to unforeseen circumstances, the debtor must immediately contact the trustee and make arrangements for catching up.
- The debtor must maintain insurance and pay taxes on property provided for in the plan, even if these payments are not included into the mortgage payment made through the plan.
- The debtor may not incur any type of debt without the Trustee’s or the Court’s permission, except debt to a doctor, pharmacist, dentist, hospital or clinic.
- The debtor may not sell any of his property without permission from the Court.
- The debtor is required to notify the court and the trustee’s office immediately of any address or telephone change.
- Before the debtor can get a discharge, the debtor must complete a financial management course and file a certificate of completion with the court.