What Happens

After I File Bankruptcy?

Q:What if a creditor continues to contact me after I file bankruptcy?

A: Once the bankruptcy is filed, the automatic stay goes into place and creditors must stop contacting you as soon as they are notified of your case number. If the creditor calls you after notice has been provided, simply give them the information once again and make a note of the date, time and person’s name that called on behalf of the creditor. If the creditor continues to contact you, either in writing or by phone, you should contact your attorney’s office.

Q: Where should I mail my monthly Chapter 13 payment?

A: The address will vary depending on the Chapter 13 bankruptcy Trustee over your case.

Charlotte Office Clients

For Chapter 13 bankruptcy Trustees in the U.S. Bankruptcy Court for the Western District of North Carolina, you can verify the address for your payments by checking the Trustee’s website. The payments should be sent to the Lockbox Address for Debtor’s Payments.

Greensboro Office Clients

For Chapter 13 bankruptcy Trustees in the U.S. Bankruptcy Court for the Middle District of North Carolina, you can verify the address for your payments by checking the Trustee’s website. The payments should be sent to the Lockbox Address for Debtor’s Payments.

Q: What happens when I make my monthly payment to the Chapter 13 bankruptcy Trustee?

A: Each month the Trustee receives a payment from you, he will distribute payments to your creditors based on a priority as established by the Chapter 13 plan. If you do not make a payment to the Trustee, he will not distribute payments to your creditors.

Q: Can my Chapter 13 bankruptcy payments change when I go to the meeting of creditors?

A: The Chapter 13 bankruptcy Trustee may change your Chapter 13 bankruptcy plan payment when you attend your meeting of creditors if any creditor files a proof of claim with the court indicating the amount owed is greater than what you included in your bankruptcy. If the claim is considerably higher than anticipated, you may not have the disposable income to afford your Chapter 13 bankruptcy payments and the Trustee could file an Objection to Confirmation of your bankruptcy. Read more about when your Chapter 13 payment can change.

Q: If my wages are being garnished by the IRS or state, when will it stop?

A: The Internal Revenue and/or state’s department of revenue will most likely stop the wage garnishment when they receive the notice of bankruptcy filing and notice of the automatic stay from the court.

Q: Will there be problems with my bankruptcy if I just filed my taxes?

A: If you file your taxes shortly before filing a Chapter 13 bankruptcy, the Internal Revenue Service and/or state’s department of revenue may not have your taxes recorded prior to your meeting of creditors. This may delay the approval of your bankruptcy or even cause the Chapter 13 bankruptcy Trustee to file an objection to confirmation of your bankruptcy.

Q: Should I file my taxes during bankruptcy?

A: While you are in bankruptcy, you are obligated to file and pay your taxes by the filing deadline. If you do not file your taxes while you are in a Chapter 13 bankruptcy, the taxing agency may estimate the taxes at an extremely high amount and add the estimated amount due to your bankruptcy and/or request your bankruptcy be dismissed by the bankruptcy court. If your case is dismissed, you will no longer be protected by the bankruptcy court and your creditors may take collection actions against you as well as proceed with foreclosure and/or repossession if warranted. If you file your taxes but do not pay the amount due while you are in a Chapter 13 bankruptcy, the taxing agency may add those taxes to your bankruptcy.

Q: If I included child support arrearages (back payments owed) in my bankruptcy, when will the garnishment from my wages be reduced or stopped?

A: If you are obligated to pay ongoing child support, usually for a child under the age of 18, the wage garnishment for that portion of child support will continue. However, most agencies are willing to allow you to pay the arrearage or the amount you are behind through the Chapter 13 bankruptcy Trustee. As a result, your garnishment will most likely be reduced for the arrearage.

Q: What should I know about making my mortgage, equity line, real property taxes, homeowners insurance and homeowner association dues after filing bankruptcy?

A: First, you should determine whether you filed Chapter 13 bankruptcy before or on or after July 1, 2009.

If you filed prior to July 1, 2009, you are responsible for making your mortgage payment, home equity line payment, real property tax payment, homeowners association dues payment and other payments to creditors that have a deed of trust on your home. Your payments become due the date of the next scheduled payment after your bankruptcy case is filed with the court – the date the court issues a case number. It is also important that you pay your homeowners insurance timely to avoid having the mortgage company add “forced-placed” insurance on your home. Forced-placed insurance is normally much higher than what you can obtain from your own insurance agent.

If you filed Chapter 13 bankruptcy on or after July 1, 2009, your mortgage payments will be included in your plan payment to the Chapter 13 Trustee. The exception will be for home equity lines of credit or HELOCs that you will pay directly to the company financing the loan, since the monthly payment may vary each month depending on the interest rate and loan balance. Your payment on the HELOC become due the date of the next scheduled payment after your bankruptcy case is filed with the court – the date the court issues a case number. If your property taxes and homeowners insurance are not escrowed into your mortgage loan payment, it is also important that you pay them timely to avoid having the mortgage company pay the taxes on your behalf or add “forced-placed” insurance on your home. Forced-placed insurance is normally much higher than what you can obtain from your own insurance agent.

Q: What if I do not receive a bill or statement from my mortgage company after filing bankruptcy?

A: If you file a Chapter 7 bankruptcy, the mortgage company for your home or the finance company for your car may stop sending bills or statements and they may no longer deduct your payment from your bank account. However, you should continue to make your mortgage payment and/or car payment if you want to keep these assets.

Q: What happens if my mortgage company refuses my payments immediately after filing bankruptcy?

A: If your mortgage company refuses to accept your first payment after filing bankruptcy, either online or by returning your payment in the mail, you should try sending it to them through the mail again and keep copies of the correspondence/information you sent them plus a copy of the postmarked envelope. If they return the payment again, you should contact your attorney.

Q: Do I need to keep my receipt when making payments on my house or homeowner association dues?

A: Our office strongly recommends you set up a file for payments made to your mortgage company and homeowner association. This will be very important should the mortgage company or homeowner association file a Motion for Relief from Automatic Stay, since there will be limited time to respond to the motion.

Q: What is a reaffirmation agreement?

A: A reaffirmation agreement is a legally binding document filed with the bankruptcy court in which you agree to keep making payments on a debt. For example, you are required to sign a reaffirmation agreement if you would like to retain personal property, such as an automobile, and keep making payments after filing your bankruptcy. Learn more about reaffirmation agreements.

Q: What happens if I change my mind about keeping the car after I sign the reaffirmation agreement?

A: If you sign a reaffirmation agreement and then change your mind, you may rescind or cancel the reaffirmation agreement at any time before the bankruptcy court enters a discharge order, or before the expiration of the 60-day period that begins on the date your reaffirmation agreement is filed with the court, whichever occurs later. To rescind a signed reaffirmation agreement, you must notify your attorney, the creditor and the court in writing. If you do not cancel or rescind the reaffirmation agreement under the correct court procedure, you will be responsible for paying the debt.