Debtor Duties in Chapter 13
Kentucky, Indiana and most bankruptcy courts have a simple Chapter 13 confirmation procedure. Many courts require the debtor to sign and review list of the debtor duties in Chapter 13. The Chapter 13 is basically like a contract, If the debtor performs his part he will get the discharge at the end of the case. In Indiana and Eastern Kentucky these duties are outlined in the Rights and Responsibilities document filed with the court.
Primarily debtors must make payments on time into the plan and to the mortgage if they have one. These payments start the month the case is filed. If the debtors fail to make payments the trustee will file a motion to dismiss the case or the mortgage company will file a motion to terminate the stay so a foreclosure can proceed.
Debtor duties in Chapter 13 for Louisville Kentucky
In Louisville Kentucky the debtor has several major mandatory duties. After the plan is confirmed, the court issues an order confirming the plan which requires the Debtor to.
- Not sell property without permission of the court.
- Obtain permission from the court to purchase property or finance debt during the plan. Because of this option the debtor may want to consider whether he needs to purchase an auto before he files the Chapter 13. Some Judges may decline purchases for more expensive autos or higher interest rates after the case is filed. These judges may mean well, but may unintentionally leave you with no car to get to work. Motions have to be filed to approve these purchases and applications often take 20-30 days to be approved.
- In Louisville, a debtor must annually provide a copy of their tax return. In Western Kentucky this also includes turning over the tax refund to the court unless the plan pays 100% to the unsecured creditors. The penalty for the failure to turn over the tax refund or to provide copies of the tax return and budget is simple: dismissal of the case.
- The debtor must also provide an annual budget to the court. This normally only means that the debtor copies their Schedule I and J unless substantial changes have occurred.
- At the end of the case a single page document called a request for discharge must be filed to obtain the discharge. Primarily this just states the debtors address and employer at the time of the discharge. It is meant to advise child support and alimony recipients where the debtor is and is employed. You have to file it regardless of whether you owe child support and alimony.
- Be sure to take the second required training which is the Debtor Education certification. The certificate is required for a discharge. Failure to file this before the case ends may mean your case is closed without a discharge and you will have to pay a filing fee and attorney fee for two motions. The first motion allows you to reopen the case. The second allows you to file the certificate late and enters the discharge.
- Make the payments on time to your mortgage and to the Trustee. These payments start the day you file.
For a more complete explanation of your duties see the Western Kentucky Chapter 13 Bankruptcy Rules
Remember to review your claims.
However, the debtor should also review their claims after confirmation. Creditors file claims to be paid. These claims are approved unless the debtor, attorney or trustee objects. Claims may have been filed in the wrong case or may be for the wrong amount. Sometimes claims are filed although you bankrupted the debt in a prior case or paid it. For that reason you should review the claims about 30-60 days after the confirmation hearing to insure you don’t overpay your Chapter 13 or pay a debt that does not even belong to you.
The failure to follow these steps will result in dismissal of the case or in overpayment to the creditors. Often the debtor will forget and make the mistake of selling assets while they are in a Chapter 13. If these assets would have been sold by a Chapter 7 trustee the debtor may have problems if they attempt to convert.