What is Chapter 13?

Chapter 13 is one method under the Bankruptcy Code to obtain relief from your creditors, while at the same time providing a fair means to pay them back as much as you can. People who file Chapter 13 cases are commonly referred to as “debtors.”

Your Chapter 13 Standing Trustee is Andrew B. Finberg, Esquire. The Trustee represents the bankruptcy estate. The Trustee is not your legal representative nor is the Trustee the legal representative for any creditor. The primary function of the Trustee is to administer the bankruptcy estate (i.e. oversee timely receipt of your plan payments and make prompt and accurate payments to your creditors). The Trustee also provides information about Chapter 13 cases to debtors, creditors, and to the Court. Neither the Trustee nor any member of her staff may give you legal advice.

While use of an attorney is strongly encouraged, it is not required. You may choose to proceed on your own, without assistance from counsel. If this is your decision, you should understand that you will be fully responsible for representing yourself and will be expected to comply with all the law and court rules and properly file all documents and motions. Also, you should be prepared to disclose at the First Meeting of Creditors the name, address, telephone number and amount you paid anyone who helped you with your filing. Bring any receipts or business cards or written information you received from the person who assisted you. If you would like legal assistance, but are unable to afford an attorney, please go to the following website for more information on the pro bono and legal aid programs in this state: Resources for Understanding Bankruptcy.

The filing fee is the fee charged by the Bankruptcy Court at the time your petition is filed. There may be additional fees for amendments to schedules, court appearances, fees to reopen; etc., which should be discussed directly with your attorney.

The attorney fee is legal fees that are agreed upon with your attorney and some, or all, may be paid through your plan. Your creditor(s)’ attorney may also be awarded fees by the Court for filing motions in your case. All attorney fees must be reviewed and approved by your Bankruptcy Judge before being paid through your plan.

The Trustee’s costs for administering your case are paid from the funds you pay into your plan. The United States Code sets the maximum charge at ten percent (10%) of Trustee receipts. The percentage fee will vary during the life of your case, but the percentage is generally less than 10% and would not be more than 10% at any time. If your case is dismissed or If the case is converted to another chapter prior to confirmation, the trustee will file a “Notice of Funds on Hand” with the Court. If there is no objection, funds on hand will be returned to you, less allowed trustee’s fees.

  • What are Trustee payments?
  • When are Trustee payments due?
  • To Whom do I make my payments payable to?
  • How do I mail my Trustee payments?

Trustee payments are the payments that you make to the Trustee to repay your creditors, cover some or all of your Attorney’s fees and cover the Trustee’s fees.

Your first payment is due the first of every month (For example: if you filed your petition with the court on June 15th, your first payment is due on July 1st). All payments should be made payable to Andrew B. Finberg and should include your full name and your bankruptcy case number. All payments must be by money order, cashier’s check, or certified funds with your case number which must be legible. The trustee also accepts electronic payment through ePay (click here to learn more). No other form of electronic payments are accepted by the Trustee. The Trustee’s office does not accept hand-delivered payments, cash payments, personal checks or bank by phone. The Trustee does accept ePay (sign up required) Do not overnight your payments as your payments go to a Post Office lock box and there is no one there to sign for them. All payments must be sent to:

Andrew B. Finberg
P.O. Box 1978
Memphis, TN 38101-1978

You may choose to have your payment deducted from your paycheck and mailed by your employer to the Trustee through a wage ordered deduction. If you choose to have your payment deducted from your pay check, a Court order must be entered by your Bankruptcy Judge. Your employer is then required to mail your payment directly to the Trustee at the P.O. Box address in Memphis, TN where all Trustee payments are mailed. Your payments may be deducted weekly, bi-weekly, or monthly, depending on how you are paid.

Even if you choose to have your payment deducted from your paycheck, it is essential that you make direct payments to the Trustee’s lockbox until you actually see the plan payments being deducted for your paycheck. It is also your responsibility to continue with the plan payments in the event there are missed days from your place of employment due to vacation, illness or termination. If your employer fails to make a full plan payment deduction, you must send the needed plan payments directly.

This is the first Court appearance that you are required to attend. You, your attorney, and your creditors will be notified of this date once your petition is filed. At this hearing, you will meet with the Trustee or one of the Trustee’s staff attorneys, with your attorney present and any creditors that choose to appear. You will be asked questions, under oath, about your assets, your liabilities and the feasibility of your plan. If a petition was filed by two individuals jointly, both must be present. This meeting will be recorded. Copies of the transcript may be requested from the Trustee’s office for a fee.

If you are physically unable to attend the First Meeting of Creditors, you and/or your attorney, must file a motion with the US Bankruptcy Court and obtain an Order allowing a telephonic meeting. You should speak with your attorney for further information.

11 U.S.C. §341 (a) requires that the Office of The United States Trustee convene and preside at a meeting of creditors. The Chapter 13 Trustee and her attorneys, by designation of the United States Trustee, are required to conduct meetings of creditors. The Bankruptcy Code and General Order of the United States Bankruptcy Court, District of New Jersey, require that Chapter 13 Debtors submit evidence of income and most recently filed Federal Income Tax returns to the Chapter 13 Trustee prior to the 341(a) Meeting of Creditors. These requirements were enacted with BAPCPA amendments to the Bankruptcy Code. To enable the Chapter 13 Trustee to conduct a meaningful 341(a) Meeting of Creditors, the documents must be filed electronically on 13Documents at www.13documents.com. The following documents are requested at least 7 days prior to the first scheduled §341(a) Meeting of Creditors. If Debtors fail to submit the documents required to conduct a meaningful Meeting of Creditors, the Trustee may move to dismiss the case.

Non-Business Debtor(s):

  • Last filed Federal Tax Return with all accompanying schedules and statements;
  • A completed “Declaration Concerning Tax Returns” (See, www.standingtrustee.com/forms);
  • Sixty (60) days pre-petition pay advices (pay stubs) and one (1) current (post-petition) pay advice. If not employed, Debtors need to provide proof of income (this includes social security, unemployment, rental payments received, family contributions, etc.). If pay advices are not available for any portion of the 60 day pre-petition period, Debtors must file a completed, “Statement Concerning Pay Advices.” (See, www.standingtrustee.com/forms);
  • If there is a Domestic Support Obligation, provide recipient(s)’ name, current address (es), and case number(s);
  • A Comparative Market Analysis (CMA), Broker’s Price Opinion (BPO) or Appraisal with a conclusion on all property owned by Debtor(s), prepared within one year of the filing of the petition, and payoff statements for all liens on each property;
  • All information on any pending lawsuit(s) (including, but not limited to, attorney’s name, nature of lawsuit, and the current status of the lawsuit); and
  • HUD-1 for property sold within the two (2) years pre-petition or transferred within the six (6) years pre-petition period.

The Chapter 13 Trustee requires that all documents be uploaded on 13Documents at www.13documents.com. All documents filed should be redacted in accordance with Fed. R. Bankr. P. 9037 which states that all filers must redact: social security or taxpayer-identification numbers; dates of birth; names of minor children; and financial account numbers. One exception would be for business cases only; bank statements should reveal the last four digits of the account number so that the accounts can be properly identified.

Business Debtor(s)*:

Any Debtor, Non-Debtor Spouse, or significant other that is or was involved in a “business” within the two (2) years prior to the filing of this bankruptcy proceeding (this includes independent contractors, real estate agents or brokers, and landlords).

  • Completed and signed Certification of Business Debtor for EACH separate business (see www.standingtrustee.com/forms). Please note that there are separate Certifications for Active Business, Closed or Inactive Business; Independent Contractor or 1099 Employee; Landlord (Rental Income); and Real Estate Agent or Broker;
  • Copies of the last two (2) filed Federal Tax Returns, along with all supporting schedules and statements (including W-2s and 1099-Misc);
  • Copies of Bank Statements for all accounts in the name of Debtor, Co-Debtor, Non-Debtor Spouse, Significant Other, and/or Debtor’s business for the one year preceding the filing of the voluntary petition. (Statements should include all pages and contain the account holder’s name, address and last four digits of the account number);
  • Profit and Loss Statements (P&L) for the one year preceding the filing of the voluntary petition (see www.standingtrustee.com/forms);
  • Copy of current Insurance Declaration Page for any active business (i.e. CGL, Worker’s Comp, E&O, Malpractice Insurance, etc.) NOTE: IF BUSINESS IS ACTIVE, THEN THE INSURANCE DECLARATION PAGE WILL BE REQUIRED NO LATER THAN 24 HOURS AFTER THE FIRST SCHEDULED 341(a) MEETING OF CREDITORS;
  • Copy of current License and/or permits in accordance with www.nj.gov/njbusiness/licenses and in accordance with requirements of the Municipality and County in which the business is located;
  • Copy of current Rental Agreements, Mortgage Payoffs, CMA w/conclusion and Insurance Declaration Page for any real property currently being rented;
  • Such other documents as may be required to assist the Trustee in completing her investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtor(s), the operation of the Debtor(s)’ business, and the desirability of the continuance of such business; and
  • If any of the above documents are unavailable, provide a Certification indicating the unavailable document and reason why it is unavailable.

All Debtors, business and non-business:

Documents required on the day of the §341(a) Meeting of Creditors:

  • Valid photo identification (US, State or County issued ID);
  • Proof of social security number (SS card; W-2; 1099; or statement from SSA with full number); and
  • Original ink-signed petition.

*If the Debtor(s) (or any member of the household, including, but not limited to, Debtor’s spouse or significant other) is/was engaged in a business within the last two (2) years prior to the voluntary petition, Debtor should ALSO provide the same documents pertaining to the business entity. (This includes rental properties, landlords, 1099 employees, or any business which closed within the last two (2) years.) NOTE: DOCUMENTS THAT ARE SUBMITTED LATE MAY DELAY THE 341(a) MEETING OF CREDITORS AND ALSO THE CONFIRMATION OF DEBTOR(S)’ PLAN.

After the first meeting of creditors hearing is held, your attorney will proceed to a confirmation hearing before the Judge. Your appearance is not required, unless you are without representation by an attorney. Your attorney must appear at any confirmation hearing. If you are proceeding without an attorney, you must be present.

At the confirmation hearing, your Bankruptcy Judge will determine if your plan should be approved or your case should be dismissed. The Trustee will recommend confirmation (approval) of your plan if the Trustee believes that the plan complies with the legal requirements for Chapter 13 cases. If the Trustee determines that the plan is insufficient, your attorney will be informed of the issues at hand. Copies of any revised or amended documents must be received by the Trustee at least three (3) days prior to the confirmation hearing. No further Court appearances are necessary unless motions are filed by your creditors or you are otherwise informed by your attorney.

If there is change in your current income(due to illness, layoff, job termination, etc.), please contact your attorney immediately. The Trustee’s office conducts a monthly review of all cases to determine which cases are in arrears, and may request a dismissal of your case for non-payment. The Trustee’s Office will attempt to work with you to restructure your payments temporarily to avoid dismissal of your case.

In order for our Office to maintain current records, it is important that you notify the Court and the Trustee’s Office, in writing, as well as your attorney’s office immediately of any change of address.

The money you pay to the Trustee is used to pay your creditors, your attorney’s fees, if any, and the Trustee’s fees. Creditors have 90 days from the First Meeting of Creditors to file a proof of claim with the US Bankruptcy Court. Government agencies have 180 days from the First Meeting of Creditors to file a proof of claim.

Creditors fall into 4 basic categories: Administrative (i.e. your attorney, creditor(s)’ attorney’s fees and costs; Secured (i.e. mortgages, auto loans); Priority (i.e. income taxes, past due child support, real estate taxes); and unsecured creditors (i.e. credit cards, medical expenses).

All creditors listed in your petition are under a restraining order (also known as the “Automatic Stay”) which prohibits them from making any attempt to collect money directly from you while your plan is in effect. However, you are required to make current post-petition payments to those creditors who hold a secured or priority claim during the length of your plan. Your attorney and any outstanding domestic support obligation creditors will be paid first, then your secured creditors, priority creditors and finally general unsecured creditors. General unsecured creditors will not be paid unless a proof of claim is timely filed.

A Motion to Vacate Stay is a formal request by one of your creditors to eliminate the Automatic Stay (restraining order). When a court grants this request, the stay is removed. Your creditors will then be able to pursue their claims and resume collection efforts against you in State Court. Motions for relief must be served on Debtor(s) and/or Debtor’s attorney. DO NOT ignore a Motion to Vacate Stay. If you do, the Court may grant the motion.

The most common reason for a creditor to file a Motion to Vacate Stay is that the Debtor is in arrears in post-petition payments or if a vehicle that is leased or secured by a lien is not insured.

The use of credit is prohibited while you are in your Chapter 13 plan. This means you cannot use and/or obtain credit cards, borrow any money from a finance company, bank or credit union. You are also prohibited from signing, co-signing, or guaranteeing any debt. You cannot buy anything over time. If you need to buy something over time while in bankruptcy or borrow money, contact your attorney. In case of an emergency you may seek the Judge’s permission for use of credit during your Chapter 13 plan.

You must obtain Court approval if you wish to sell, buy, refinance or transfer any property during your Chapter 13 plan. If you receive a profit from a sale or refinance, some or all of that profit may have to be applied to pay your Chapter 13 creditors. If you fail to obtain Court approval, the transaction may be set aside and your case may be dismissed. If you have entered into a sale or refinance, you should immediately contact your attorney, so he/she can file an appropriate motion with the Court.

Any real estate broker you wish to utilize must be approved by the Bankruptcy Court.

If you plan to pay all or part of your plan from the sale or refinance of real property, you must notify the Trustee and request a payoff, in writing, at least ten (10) days prior to the closing or it may be delayed.

It is possible to obtain a “no position” letter from the Trustee’s Office in order to purchase or lease a vehicle. The criteria for obtaining a “no position” letter for the purchase or lease of a vehicle is as follows:

  • The new vehicle payment must not exceed $450.00 a month and the interest rate may not exceed 18%. If the new vehicle payment exceeds $450.00 a month and/or interest rate of 18% then you must contact your attorney and seek court approval.
  • If you are currently paying for another vehicle through your Chapter 13 you may need to contact your attorney and obtain court approval to purchase and finance another vehicle.

Once you have selected a new vehicle but before you purchase, you must contact the Chapter 13 Trustee’s Office for the vehicle financing paperwork.

The law requires that every Chapter 13 plan last for a minimum period of three years unless you are able to pay off your debts in full in a shorter period. However, depending upon your disposable income as disclosed in your schedules and proofs of income, together with other factors, the law might require you to commit your income for a maximum of five years. The actual duration of your plan will depend on the amount of the claims filed by your creditors that are to be paid through your plan.

If you want to pay off your Chapter 13 plan early, you must contact the Trustee’s office in writing and request a payoff letter. The request may be mailed, faxed or e-mailed to [email protected].  Such a request will be answered within seven (7) business days. Because the Bankruptcy Code requires a Chapter 13 plan to last a minimum of three years unless all debts are paid in full, any request for a payoff in a period less than three years will be given a payoff in the amount necessary to pay 100% of all timely filed proofs of claim. Additionally, if your applicable commitment period is five years, the payoff amount provided to you will be for the amount needed to pay 100% of all timely filed proofs of claims.

In response to the COVID-19 pandemic, on March 27, 2020, Congress passed legislation known as the CARES Act. The Act amended that part of the Bankruptcy Code mandating the term of your plan. Pursuant to the Act, under certain circumstances, a debtor whose plan was confirmed prior to March 27, 2020, may seek to extend the term of the plan for a period up to a total of 84 months from the date the original petition was filed with the Court.

Your Chapter 13 Bankruptcy is voluntary therefore you are permitted to request that your Chapter 13 case be dismissed at any time. However, you should understand that a dismissal will remove the automatic stay (restraining order) from your creditors. Your creditors will then be able to enforce their claims and resume collection efforts against you in State Court.

Please note that the Court, Trustee and/or creditors may request a dismissal of your case at any time for failure to file documents, non-payment, lack of feasibility, or failure to comply with the terms of the confirmation order.

Contact your attorney if you expect to miss payments due to loss of employment, extended illness or medical disability. Under Bankruptcy law, there are serious consequences if your case is dismissed.

After you have successfully completed all payments to the Trustee and your confirmed plan has been paid, the Bankruptcy Court will grant you a discharge. Before you receive your discharge you are required to attend a personal financial management course. You must also file a certification with the Court that you are current in all support payments, both pre-petition and post-petition. After your plan is completed you will receive two documents:

  • Trustee’s Final Report and Account, which indicates what each creditor was paid and the amount of Trustee’s commission. If you believe that there are any discrepancies in this report, it is your responsibility to contact the Trustee’s office and/or your attorney.
  • Order of Discharge which is the Bankruptcy Court’s official document stating you have completed your Chapter 13 plan. This Order of Discharge may be significant in obtaining future credit, and it is your responsibility to provide the various credit services with a copy of your Order of Discharge:

You are required to attend an instructional course in personal financial management in order to complete your case. While you may attend any course that has been approved by the United States Department of Justice, the Trustee’s Office provides a free course that will fulfill this requirement. The Trustee’s financial management course is provided yearly. You will receive notice in the mail of the dates and times of the next scheduled course.

Information relating to your Chapter 13 Bankruptcy case will be made available via the Internet to your creditors and other parties in interest. Your Chapter 13 Trustee has a duty, unless otherwise ordered by the Bankruptcy Court, to furnish information concerning the administration of your bankruptcy case as is requested by your creditors. Consistent with this duty, the Chapter 13 Trustee will make the following information available to your creditors on the National Data Center (NDC) web site:

  • Your name, address, bankruptcy case number, state and district in which your case is pending and the trustee assigned to your case. Neither your employer’s name nor your social security number will be displayed on the site; however, parties in interest will be able to search for your bankruptcy case using your social security number.
  • Information regarding claims filed against your bankruptcy case including the identity of the claimant, type of claim (i.e. secured, priority taxes, unsecured, etc.), and the amount of the claim.
  • A history of all payments you make to the Trustee including the date and amount of each payment.
  • A history of all payments made by the Trustee to creditors in your bankruptcy case including the amount of the check, the person to whom the check was sent and the date the check was issued.

You may review, without charge, your Chapter 13 case information that is posted on the NDC site. If you believe the information about your bankruptcy case is inaccurate, you can contact the web site host to report the error. You should receive a written response from the web site host within thirty (30) days following receipt of such report. You may also track your payments and distribution of payments by registering at www.ndc.org.

The US Bankruptcy Court will grant an Order of Discharge to the person(s) named as the Debtor(s) after the completion of all payments under the Chapter 13 plan. It is not a dismissal of the case.

The discharge prohibits any attempt to collect from the Debtor(s) a debt that has been discharged. For example, a creditor is not permitted to contact a Debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the Debtor. A creditor who violates this order can be required to pay damages and attorney’s fees to the Debtor.

However, a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the Debtor’s property after the bankruptcy if that lien was not avoided or eliminated in the bankruptcy case. Also, a Debtor may voluntarily pay any debt that has been discharged.

The Chapter 13 discharge order eliminates a Debtor’s legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt is provided for in the Chapter 13 plan or is disallowed by the Court pursuant to section 502 of the Bankruptcy Code.

Some of the common types of debts which are NOT discharged in a Chapter 13 bankruptcy case are:

  • Domestic Support obligations;
  • Debts for most student loans;
  • Debts for most fines, penalties, forfeitures, or criminal restitution obligations;
  • Debts for personal injuries or death caused by the Debtor’s operation of a motor vehicle, vessel, or aircraft while intoxicated;
  • Debts for restitution, or damages, awarded in a civil action against the Debtor as a result of malicious or willful injury by the Debtor that caused personal injury to an individual or the death of an individual (in a case filed on or after October 17, 2005);
  • Debts for certain consumer purchases made after the bankruptcy case was filed if prior approval by the Trustee of the Debtor’s incurring the debt was practicable but was not obtained;
  • Debts for certain taxes to the extent not paid in full under the plan (in a case filed on or after October 17, 2005); and
  • Some debts which were not properly listed by the Debtor (in a case filed on or after October 17, 2005).

This information is only a general summary of the bankruptcy discharge. There are exceptions to these general rules. Because the law is complicated, you may want to consult an attorney to determine the exact effect of the discharge in your case.

All creditors and parties in interest in your case will receive a copy of the discharge. It is your responsibility to send a copy of your discharge to the three credit bureaus, if you wish.