Debtors

Frequently Asked Questions

• Am I Required to File a Tax Return?
  Follow THIS LINK to the IRS Guide on Requirements to File Tax Returns.
• What is the Trustee Fee % in Fiscal Year 2024?
  Effective October 1, 2023, the US Trustee Program has established the Trustee Fee for cases administered by David Ruskin at 8.5%.  This amount can fluctuate during the course of a fiscal year as well as during the life of a Plan. We encourage the use of a 10% fee when calculating cases to account for fluctuations during the life of the Plan.
• How do I handle an insurance payoff?
  There are too many conflicting answers to this question for us to provide a policy position. It falls in the category of legal advice, which our office cannot provide.
• Am I responsible for tax debt incurred during my Chapter 13 Plan?
  Yes.
• Can I lease or buy a vehicle while in a Chapter 13?
  Yes it is possible to lease or buy a vehicle but you must get the court’s permission.
• Can I pay off a debt separate from my Chapter 13 Plan?
  The law requires you list all of your assets and all of your debts.  The Chapter 13 Plan should mention all debts and whether it is being paid through the Trustee or being paid by you directly.  If you pay a creditor “outside” of the Plan they may get double payments because your Plan should be paying them.
• Can I pay off my Plan early?
  Only if you repay your creditors 100%.
• Can my attorney charge me every time I call or email with a question?
  The only thing an attorney has to sell is their time. Problems will occur if you are not clear from the beginning about how your attorney will bill you. All fees must be disclosed in a Chapter 13 Plan. After your case is filed attorney fees must be paid by Order of the court and through the Trustee. Your attorney must file a request with the court for payment of attorney fees and a copy of that request must be sent to you and all creditors. The request for attorney fees must include the date services were rendered, what was done, how long it took and the billing rate. If you object to the amount of attorney fees being requested please send letter to the Judge’s clerk with your name, case number and a brief statement of your concern. They understand you are not attorneys and the Judge will set a hearing. You will be able to attend and let the Judge know why the fees should not be paid.
• Do I have to disclose a gift or inheritance?
  Yes.  Any gift of substantial money must be disclosed.  It doesn’t matter where the money came from – it has to be disclosed.  Contact your attorney.
• How does retirement, pension, 401(k) and IRA income affect a Plan?
  All sources of income need to be included in your Plan.  If you change to retirmement income during the Plan then you will need to modify your Plan.  Contact your attorney to start this process.
• How long does it take for my money to be credited to my case after I mail it?
  About 3-5 business days.
• I am in a 36 month Plan, when can I expect to receive a Discharge?
  After terms of your Plan have been completed we review and audit your case.  We send a Notice of Completion to the court stating that all payments have been made.  Remember to file your second certificate of counseling with the court as well as the Domestic Support Affidavit.  The Court will enter a Discharge thirty days after the Notice of Completion has been sent to the court.  Failure to file the second Educational certificate and the Domestic Support Affidavit can cause a delay, or can even result in the Court closing the case without issuing a Discharge.
• I need to borrow money for a major repair or emergency. How do I do that?
  If you need to borrow over $2,000 to replace a furnace, old vehicle, leaking roof etc, you must get court approval.  If you want to purchase a home while in Chapter 13 you must get court approval.  If the debt is reasonable the Judge will usually not turn down your request.  To make the process faster please provide estimates or information relative to the debt you wish to incur. This applies to all cases, even if you are in a 100% Plan.
• Is there a cap on attorney fees?
  It depends on the contract you have with your lawyer.
• My circumstances have changed, can I change the terms of my Plan?
  You can always ask the Court to modify your Plan.  If there is a change in income, dependents, expenses etc. speak with your attorney and they will draw up the necessary documents to modify your Plan.
• Student Loans - why are the listed if they are not forgiven?
  All debts must be listed in your Chapter 13 Plan.
• What are the benefits of filing a Chapter 7 versus a Chapter 13?
  The benefits of a Chapter 7 and Chapter 13 are totally different.  Some debtors file a Chapter 13 because they are not eligible for a Chapter 7.  Each case is different and the benefits of a Chapter 7 or a Chapter 13 should be discussed with your attorney.  The advantages of one chapter over another differ from person to person and requires the advice of a professional.  We are prohibited by law from providing legal advice.
• What are the tax implications for filing a Chapter 13?
  Most of the time when you have debt forgiveness you are liable for the debt forgiven.  However, if you are in a Chapter 13 and receive a Discharge you are exempt from paying taxes on this forgiven debt.
• What happens if I have sent the Trustee too much money?
  If you send in extra money we will issue you a refund check at the end of your case once the audit is complete.  Make sure you keep your address current with your attorney, the court and the Trustee.
• What happens to my credit rating while in a Chapter 13?
  Your credit rating can go up while in a Chapter 13 as long as your payments are being made on time.  In addition, the more time that passes without delinquent payments the better off you are.  Please come to our Credit Score workshop (click on the EVENTS link in the More Info section to the right) for more information on this topic!
• What is the "Delinquency" amount on reports?
  The "delinquency" is the difference between what our computers say you owe versues what it shows you have paid in.  If you have a delinquency surrounded by “( )” it’s actually a positive amount and you are ahead in payments.  Delinquency reports are only current as of the date of the report.  Please do not make a big issue over a small delinquency.  If the delinquency number is elevated you may want to call your attorney or one of Case Analysts to look into it for you.
• What is the Trustee fee for?
  To pay for the operation of our office: rent, salaries, equipment, etc. The Trustee fee changes every once in a while to adjust for changes.
• Why is there a "hold perm" on reports and the case information web sites? What is it?
  We place a “hold perm” on checks we receive to make sure they clear the bank.  Once they clear we lift the hold perm and place the funds in the Plan.