By Ryan C. Wood
You are responsible for making your Chapter 13 plan payments on time every month once your Chapter 13 bankruptcy case is filed. You will receive a notice from the trustee’s office in the mail detailing when the first payment is due and how to make the payment. Most bankruptcy lawyers also send you the same information at the time your case is filed. The Chapter 13 trustee that is assigned to your bankruptcy case will be providing you with information on when and where to make your Chapter 13 plan payments. The trustee can and will file a motion to dismiss your case if you fail to make these monthly payments. Some trustees are more lenient than others when it comes to filing a motion to dismiss for nonpayment. Some trustees will file the motion immediately after a missed payment and some trustees will wait until you are a month or more behind before filing a motion to dismiss for nonpayment. However, you should always be aware of how much you owe and when you have made a payment. You cannot rely on the trustee to tell you that you are late on a payment because that may be too late to save your Chapter 13 bankruptcy case from dismissal.
There are several ways to make a plan payment to your Chapter 13 trustee. One way is to have the plan payments be directly deducted out of your paycheck. This way ensures that your plan payments will always be made on time. However, some people just do not like seeing their paychecks decreased for any reason and like to make the payments themselves. That is fine as well. You can personally mail in the payment to the trustee every month. Most trustees require that you pay with cashier’s check or money order only. They do not want to deal with bounced checks. You should keep copies of all payments that you have made so that if there are any errors in accounting you can provide proof of payment. What happens if you mailed your payment into the trustee but the trustee never received your payment? Unfortunately, having your payment lost in the mail is one of the possibilities and risks of mailing in a payment. If the trustee indicates that he or she never received your payment you can look into canceling the cashier’s check or money order that was not received and obtaining a new one to mail to the trustee immediately. One method of ensuring that you know exactly where your payment is would be to purchase a delivery confirmation or some other way of tracking the mail. However, that may be costly and adds up over time. The choice is entirely up to you. Not all trustees have set up or approved paying by ACH, but a third way of making a payment that is becoming more common is to pay the trustee electronically through your checking account. Most trustees do not take regular “bill pay” from your bank since it is similar to a personal check: it could bounce and would be a headache to resolve and would also result in lots of fees that you would need to pay. The electronic payment would most likely be from a third party vendor approved by the trustee that you would need to go through. There are costs involved but it would probably save you a lot of time and would be convenient so you would need to weigh the convenience factor against the cost.
If you are not able to make a payment because of changed financial circumstances you should contact your bankruptcy lawyer immediately to modify your Chapter 13 plan. Do not wait until it is too late before contacting your attorney. If you do not have an attorney you should modify your plan yourself once you know that there will be changed circumstances such as being on disability, less work hours, or being laid off. There are a lot of different ways in which your financial circumstances could change. If you are planning on filing a Chapter 13 it is highly recommended that you seek the services of an experienced attorney to help you through your Chapter 13 bankruptcy case.