How, When & Where of the Chapter 13 Plan Payment

Chapter 13 is a section of the Bankruptcy Code that allows individuals and small business owners in financial difficulty to repay their creditors.

When you file a Chapter 13 Bankruptcy Petition with your Bankruptcy Lawyer, one of the documents you will file is called the Chapter 13 Plan.

That Plan sets out how your Secured creditors and Unsecured Creditors are paid and must be approved (Confirmed) by the Bankruptcy Judge.  The approval usually occurs around 60 days after your file your petition at what is called a Confirmation Hearing.

Requirements for Chapter 13 Bankruptcy

One of the requirements of the Judge approving your Plan is for your payments to have all been made.  So how do these payments get made, where do you send them and when are they due?  These are all very important questions.

When are Chapter 13 Payments Due?

Your 1st Chapter 13 payment is due 30 days from the date you sign your petition and it is filed.  For instance, if you file on June 7th then your first payment should be received by the Trustee’s office no later than July 7th.  You have to be careful on those 31 day months, for instance, if you filed your petition on July 7th, then your 1st payment would be due on August 6th.

Where Do You Send Payments?

Once you file your petition, you will receive a notice in the mail a few days later from your particular Trustee’s office providing you the address of where your payment must be sent.

How Are Payments Made?

You have 2 options as to how you can make your payment.  It can be direct or by payroll deduction.  If you choose to pay direct you have usually have several options as to the method you make your payment.  One option is to simply mail it to your Trustee.  Snail mail as it is now called can sometimes take as long as 7 to 10 days for it to actually be received by your Trustee, so you will need to plan accordingly if this is your choice.  For instance, if your payment is due on the 15th, I would mail it around the 5th to insure it arrives on time.  Another couple of ways that are usually available by your Trustee is to either pay by phone or pay online.  This is an especially good method if you are paying last minute as it will draft the funds directly out of your account and usually can be received immediately or with 24 to 48 hours.  There is sometimes an extra fee for this method.

The other option is by payroll deduction.  The funds are deducted from your pay check each pay period and sent by your employer directly to the Trustee each month.  Statistically, more cases are both Confirmed and ultimately completed successfully by this option.  It gets made each month and you don’t have to worry as it simply gets taken out of your paycheck according to your pay schedule, whether it be weekly, bi-weekly, semi-monthly or monthly and on to the Trustee.  Usually at no extra cost.  You even get to save your envelopes and postage.

At Bond & Botes, we make it simple for you as we give you a document that details all of the answers to these questions and many more.  All the information you can possibly need will be provided to you at the signing of your petition.  Thus, everything will be at your fingertips for easy access when it comes time to make your 1st payment.  Our goal is to make this difficult time for you as easy and without stress as possible.

If you are struggling to pay credit cards, medical bills or personal loans, not to mention your mortgage and vehicle loans, please call one of our conveniently located offices at Bond & Botes to set up a private consultation with one of our experienced attorneys.

We will analyze your situation and help you make the best decision possible to help you navigate your financial problems.