You probably saw this one coming. As with many things, money is what makes the Chapter 13 world go round. The monthly payment you send to the Chapter 13 Trustee helps to fund his or her business operations, pays your creditors (often for items you want to keep), and probably pays your attorney, too. Miss a payment or two and you can count on hearing from someone.
“So don’t forget to make your payments!”
This simple admonishment raises a host of questions: What payments? For how much? When? To whom? Can you send a personal check? Can you drop the payment off at the Court or Trustee’s office? The local practice varies, but here are some basic guidelines. Always ask your attorney if you have a question, and always follow your attorney’s advice (as opposed to something different that you read online, heard from a friend, or read in a blog!):
- Typically, your Chapter 13 payment will be due 30 days after you file your case. Urban legends persist that no payments are due until after you go to a bankruptcy meeting, or until after the Court approves your plan. There is no such provision in the Bankruptcy Code! In fact, the Court usually cannot approve your plan until it’s clear you will be able to make your payments: And the best way for the Court to determine that is to see that you have already been making your payments! Plan to send your first payment to the Trustee so that it is received within the first 30 days of your case filing. (And just as importantly, make regular payments every 30 days after that.)
- Your personal checks, credit cards and cash are no good here! Many Courts and Trustees will not accept a personal check written by someone in bankruptcy. For similar reasons, plus a general prohibition against borrowing money while in bankruptcy, you cannot use a credit card to make bankruptcy payments. For security reasons, many Trustees do not want to handle cash. The usual ways to make payment involve sending a money order or cashier’s check, or using your bank account to make electronic payments. Your attorney and the Trustee should be able and willing to show you how to sign up for and use special electronic payment systems set up for this purpose. If you pay with a money order, be sure to save the receipt attached to the money order so that you can track the payment. It’s also a good idea to include your bankruptcy case number on the face of the money order to make sure that the money is credited correctly.
- The Trustee is not the Court. Bankruptcy can involve a confusing cast of characters: Clerks, Creditors, Judges, Trustees and U.S. Trustees. The Chapter 13 Trustee is an independent office, completely separate from the U.S. Bankruptcy Court. That’s important to remember, because you do not want to send your Chapter 13 bankruptcy payment to the Bankruptcy Court. (It’s important to keep the idea of your monthly Chapter 13 payment separate from the filing fee. The monthly payment goes to the Trustee, but the filing fee belongs to the Bankruptcy Court and is paid to the Court Clerk.)