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Frequently Asked Questions Quick Reference Table Frequently Asked Questions Quick Reference Table Question Chapter 7 Chapter 13 What occurs when an NCP files By federal law, some actions are By federal law, some actions are for bankruptcy? immediately proscribed, like as immediately proscribed, such as civil (indirect) contempt. civil (indirect) contempt. This However, the duration of this duration of this prohibition is prohibition is usually only 60- usually 3-5 years. 120 days. Other actions, such as income Other administrative actions, withholding, license suspension, such as income withholding, credit bureau reporting and tax license suspension, credit refund interception may be bureau reporting and tax refund instituted. Passport revocation is interception may be initiated. not recommended. However, Passport revocation is not income withholding and tax recommended. refund interception may be limited by the confirmation order. Be careful! How does the obligor pay pre- Generally, the obligor pays by Generally through the petition debt during the income withholding, or directly bankruptcy trustee, who pays bankruptcy? to the clerk’s office or state the state disbursement unit. disbursement unit if income Some plans allow for the withholding is not available. obligor to pay outside the plan. What will happen if the obligor If administrative methods like If administrative methods like fails to pay pre-petition debt? income withholding, tax refund income withholding, tax refund offset, and license suspension offset, and license suspension aren’t working, bankruptcy aren’t working, bankruptcy court permission is required to court permission is required to lift the automatic stay before lift the automatic stay before contempt or other actions may contempt or other actions may be initiated. be initiated I Question Chapter 7 Chapter 13 Is child support dischargeable? No. Child support arrearage, No. Child support arrearage, including money owed to the including money owed to the state, may not be discharged in state, may not be discharged in bankruptcy. bankruptcy. What is the usual duration of a Approximately 60-120 days Typically 3-5 years, depending bankruptcy action? on the plan. What Title IV-D actions can be · Paternity Establishment · Paternity Establishment taken during the pendency of a · Child Support Order · Child Support Order bankruptcy case? Establishment Establishment · Child Support Modification · Child Support Modification · Income Withholding · Income Withholding* · License suspension · License suspension · Credit bureau reporting · Credit bureau reporting · Tax refund interception · Tax refund interception* · Medical Support · Medical Support Enforcement Enforcement * Depends on Confirmation Order; Discuss with Title IV-D Attorney What enforcement actions can · Civil contempt actions · Civil contempt actions NOT be taken while a · Foreclosure on bankruptcy · Foreclosure on bankruptcy bankruptcy case is pending? estate property estate property · Passport Revocation · Passport Revocation · Demand Letters · Demand Letters · Any collection outside the plan if confirmed plan calls for payments to be made in the plan Can bankruptcy court authorize Yes, but a request to lift the Yes, but a request to lift the enforcement actions that are automatic stay must be filed in automatic stay must be filed in otherwise prohibited? the bankruptcy court. A hearing the bankruptcy court. A hearing may be required. may be required. II Question Chapter 7 Chapter 13 Does the filing of a petition Yes Yes bring the automatic stay into effect under §362? What assets become property of Debtor’s property at Pre-petition property like in the estate? commencement, with a few Chapter 7 cases, as well as post- exceptions. Post-petition petition property. §§541 and property is usually excluded 1306. §541. How is estate property Liquidation and distribution of Reverts to the debtor upon processed? proceeds to creditors (possibility confirmation of the plan. §1327. of redemption under §722 or the retention of encumbered property by reaffirmation under §524). What significance does None. The debtor retains this The debtor’s disposable income bankruptcy have on the debtor’s income. must be directed to payments post-petition income? under the plan. §§1322(a), 1325(b). Who administers the estate and Trustee administers the estate Trustee implements operates any of the debtor’s and conducts interim business investigative and ministerial business? operations. Business is function and disburses payments liquidated as soon as possible. under plan. Debtor continues to §§701-703, 721. operate any business under trustee’s supervision. §§1302, 1304. Can the case be converted to a Debtor has an expansive Debtor has a broad right of case under another chapter? If conversion right. §707. conversion. §1307. Creditors so, who may apply to court for Creditors can initiate conversion can convert to Chapter 7 for conversion? to Chapter 11 for cause. §706. cause §1307. May be dismissed by debtor/ Debtor has broad right to interest party only for cause, or dismiss. Other interested parties by U.S. Trustee or court. can dismiss for cause. §1307. III Question Chapter 7 Chapter 13 What is the time period for Liquidation and distribution as Payments must be made over a payment? expeditiously as possible. §704. period of 3 years to 5 years, depending on the plan. §1332. What are the guidelines Creditors cannot get more than Plan must give secured establishing the minimum level the total proceeds realized from creditors the present value of of payment to creditors? estate property. Secured claims the secured claim, and preserve are satisfied from proceeds of their liens. Priority claims must collateral. Priority claims are be paid in full. Payments to paid in order of rank, followed unsecured creditors must meet by general unsecured claims. “best interests” and “disposable Members of each class share pro income” tests. Creditors can rata. Once the fund is accede to lesser payments. exhausted, junior classes are §§1322, 1325. excluded. §§506-507, 726. To what degree may the debtor No discrimination is allowed. The plan may designate classes favor of a preferred creditor or Creditors in each category of unsecured creditors and may class of creditors in the (secured, priority and discriminate between them. bankruptcy distribution? unsecured) must be treated on However, it cannot discriminate an equal basis as other creditors unfairly against any class and in that category. cannot discriminate between creditors in a class. §1322. Does the debtor have the power No, unless the secured creditor Cure, restructuring and to ameliorate prior default on or consents to the modification in a modification in the plan are to reconstruct payments on or to reaffirmation agreement under generally allowed. §1322. modify secured obligations? §524. Do creditors have any ability to There is no plan in this form of Only the debtor may propose a participate in the formulation of bankruptcy. plan. §1321. the plan, or to propose their own plan? To what degree is creditor Creditor consent does not Creditors have no vote on the consent needed to approve the present in the Chapter 7 debtor’s plan, but are allowed to proposed bankruptcy distribution, which is fixed by object if it fails to meet distribution? the Code. §726. confirmation standards. They can agree to treatment less favorable then that to which they are authorized under the Code. §§1325, 1327. IV Question Chapter 7 Chapter 13 When is the discharge granted? During the course of the case, After completion of payments after conclusion of the period under the plan, unless a for the filing objections to hardship discharge is granted. discharge. Rule 4004. V .
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