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Chapter 13 Help

dlynk196
Valued Member

Chapter 13 Help

Hi all,

I'm embarrassed to even have to inquire about a bankruptcy, but I'm here and need to deal with it. My wife and I are filing a chapter 13 bankruptcy, but I have so many questions. First, after the payment plan is approved by the trustee, do I only have to make the monthly payment on time and will be good, or does the trustee actually have access to our checking account and watches all of our transactions? What happens after the plan is approved? Do I need to submit bank statements every month? Paystubs? Or just make sure payments are made on time?

 

I see on here that people talk about asking trustee for approval to get a credit card, or secured card. Does this mean the trustee watches our credit report? How would they know we opened a card?

 

Once final payment is made, do we need to show a bank statement at that point,  or do we just wait for discharge?

 

Please, and insight will be greatly appreciated. 

 

Thanks 

Message 1 of 10
9 REPLIES 9
CH-7-Rebuilding
Valued Contributor

Re: Chapter 13 Help


@dlynk196 wrote:

Hi all,

I'm embarrassed to even have to inquire about a bankruptcy, but I'm here and need to deal with it. My wife and I are filing a chapter 13 bankruptcy, but I have so many questions. First, after the payment plan is approved by the trustee, do I only have to make the monthly payment on time and will be good, or does the trustee actually have access to our checking account and watches all of our transactions? What happens after the plan is approved? Do I need to submit bank statements every month? Paystubs? Or just make sure payments are made on time?

 

I see on here that people talk about asking trustee for approval to get a credit card, or secured card. Does this mean the trustee watches our credit report? How would they know we opened a card?

 

Once final payment is made, do we need to show a bank statement at that point,  or do we just wait for discharge?

 

Please, and insight will be greatly appreciated. 

 

Thanks 


These are all great questions and I don't know the answers since I did a chapter 7, but I would simply type up these questions in an email and send the email to your lawyer.   The trustees in each district have an incredible amount of leeway in how they manage their bankruptcy filers.    I would not rely on any advice on a forum like this, or any forum, because the standards are simply too varied based on where you live and how your trustee operates.   Also I would always use email or a letter so that your lawyer's response is in writing and you can keep it in case something arises down the road.   Good luck!

Message 2 of 10
Lurker22
Regular Contributor

Re: Chapter 13 Help


@dlynk196 wrote:

Hi all,

I'm embarrassed to even have to inquire about a bankruptcy, but I'm here and need to deal with it. My wife and I are filing a chapter 13 bankruptcy, but I have so many questions. First, after the payment plan is approved by the trustee, do I only have to make the monthly payment on time and will be good, or does the trustee actually have access to our checking account and watches all of our transactions? What happens after the plan is approved? Do I need to submit bank statements every month? Paystubs? Or just make sure payments are made on time?

 

I see on here that people talk about asking trustee for approval to get a credit card, or secured card. Does this mean the trustee watches our credit report? How would they know we opened a card?

 

Once final payment is made, do we need to show a bank statement at that point,  or do we just wait for discharge?

 

Please, and insight will be greatly appreciated. 

 

Thanks 


it will vary by trustee....but in all cases you must receive approval to establish credit! (but different trustees have a different view on what's credit)

 

In my case:

I make my payments every month

I submit a copy of my tax return every year

If my refund is over $2K I must forward to the trustee unless I have a "good need" for it (i.e. my fridge died last January)

I was allowed to open a secured card with funds I saved after filing - my trustee does not view this as credit, only an extension of my savings but other trustees will not view this the same

 

I don't believe in any case you'll need to supply bank statements, credit reports, check stubs etc

 

You lawyer can give you a better idea of how things are handled by your specific trustee

Message 3 of 10
dlynk196
Valued Member

Re: Chapter 13 Help

Thanks for the replies. Do you have any idea if you were able to increase your credit score after the plan was approved? I'm wondering if the credit stays tanked for 5 years, and doesn't increase until after discharge, or can the score increase and rebuild while in the plan?

Message 4 of 10
kiea
Frequent Contributor

Re: Chapter 13 Help

Your score will immediately go up if have high ulitization now because your accounts will be closed and the balances will zero out.  Transunion & I think Equifax will delete all payment history for all accounts that were included in bankruptcy so if you have any lates they will be deleted within days of filing and some of your accounts will be completely deleted from your reports.  

 

From there you will have to establish a postive payment history.  If you look at past experiences on this forum, many people have been able to get a 670-700 credit score while in Chapter 13.  Of course, it will take some time and it depends on where you start.  

 

Search for the forum on Chapter 13 friendly credit cards.  That will give you a good idea on who will be willing to approve you during bankruptcy.

Start of rebuild July 2021

January 2022
Message 5 of 10
Bmac66
Frequent Contributor

Re: Chapter 13 Help

I'm 2.5 years into my 5 year plan. My payments are taken out of my paycheck. I think it depends on the trustee. I wish I didn't have to since now my employee knows. But it is what it is. My plan has incremental increases as certain items gets paid off. I just paid off a $700 auto loan and now my plan will increase by $700. It's all laid out in your plan so you will know well in advance. You will have to get approval for any new credit. My plan allowed me to purchase a new vehicle when my lease ended since I couldn't keep the vehicle. They said my payment could be no higher than the lease payment. My spouse did not file with me so what we did was just finance the loan in his name. My payment is $50 less than my max. My attorney said this was fine to do it this way as long as our household expenses remain the same. Otherwise you have to sign a purchase contract and find a dealership who is willing to hold the vehicle while waiting for court approval. No dealership is going to do that now with the car shortage. I'm also allowed to be an authorized user on my husbands credit cards. That helps with my credit score since they are being reported to the bureaus. Once you file everything on your credit report will disappear. My score went from low 500s to around 670 now. Each year I have to send a copy of tax returns but that's it. It's a difficult road but worth it. If you keep anything out of your filing such as auto loans make every payment on time or they can file to remove the automatic stay and come reposess. Good luck and talk to an attorney. Most do a free consultation. Keep us posted 

Message 6 of 10
Lurker22
Regular Contributor

Re: Chapter 13 Help


@dlynk196 wrote:

Thanks for the replies. Do you have any idea if you were able to increase your credit score after the plan was approved? I'm wondering if the credit stays tanked for 5 years, and doesn't increase until after discharge, or can the score increase and rebuild while in the plan?


I'm fortunate that my trustee didn't have an issue with me opening secured cards, I have the US Bank Cash + Secured which reports and is the only thing reporting - not even my mortgage is reporting because it's included in the 13 plan so that is helping my score 

Message 7 of 10
Lurker22
Regular Contributor

Re: Chapter 13 Help


@Bmac66 wrote:

I'm 2.5 years into my 5 year plan. My payments are taken out of my paycheck. I think it depends on the trustee. I wish I didn't have to since now my employee knows. 


Thankfully for me, my attorney asked if I had any concerns with the trustee doing a payroll deduction, I didn't want my employer finding out, my attorney had me write a simple statement that I was concerned about my employment if they did a wage deduction - no questions asked so long as I make the payments each month on time (what's funny is it takes the trustee between 7-30 days to cash my check) 

Message 8 of 10
jmw1
Frequent Contributor

Re: Chapter 13 Help

@dlynk196 

 

You have some good questions. First of all, the trustee is monitoring thousands of cases over the past five years with a limited staff out of his pocket. So the monitoring is going to be limited.  Until confirmation, you should expect to submit every paystub. Every year, you will be required to submit a tax return. It costs the trustee money to file motions in court  to increase the plan payment and it will cost you more legal fees to respond to them. So there is a tolerance for increased wages due to inflation without the trustee asking for a payment increase. 

 

Depending on how much extra time the trustee has on his hands, he might ask for paystubs every year to see if he can increase the plan payment. 

 

No more bank statements are needed after the initial filing unless there is an issue.

 

As far as new credit, ask your lawyer because the policy differs from trustee to trustee.

 

 

Message 9 of 10
yodi2007
New Contributor

Re: Chapter 13 Help


@dlynk196 wrote:

Hi all,

I'm embarrassed to even have to inquire about a bankruptcy, but I'm here and need to deal with it. My wife and I are filing a chapter 13 bankruptcy, but I have so many questions. First, after the payment plan is approved by the trustee, do I only have to make the monthly payment on time and will be good, or does the trustee actually have access to our checking account and watches all of our transactions? What happens after the plan is approved? Do I need to submit bank statements every month? Paystubs? Or just make sure payments are made on time?

 

I see on here that people talk about asking trustee for approval to get a credit card, or secured card. Does this mean the trustee watches our credit report? How would they know we opened a card?

 

Once final payment is made, do we need to show a bank statement at that point,  or do we just wait for discharge?

 

Please, and insight will be greatly appreciated. 

 

Thanks 


Nothing to be embarrased about it! I went through it (wife was not needed to be included in chapter 13) and it has helped me correct my mistakes and achieve a higher understanding of my credit! Through these forums I've learned soo much abouthow to get my credit scores higher no matter my yearly salary! I just completed my Chapter 13 in December and will be looking to purchase a house in the few coming months with a well known broker who manual underwrites. 

My trustee allowed a low balance credit card, allowed me to keep 100% of my tax refunds, the lawyer will ask for bank statements and everything wqill be presented at your confirmation hearing. I told them at my hearing that my salary was going to ballon from 35k/yr to 70k/yr as I was about to graduate from Nursing School. They said that will not affect my case or it's payments. I had 3 missed payments but caught them up fast and they even allowed me to payout my chapter 13 4 months early if I made the full amount. I even recived 500 dollars back from the trustee. 

Just take it easy one day at a time and make your payments on time. If you can't or something is hendering you to , don't wait talk to your lawer or call the trustee office ASAP! 

Message 10 of 10
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