Regular Payment Legal Definition

Regular Payment Legal Definition

Generally, debt relief releases the debtor from all debts that are or are not authorized in the plan, except for certain debts mentioned in 11 U.S.C. § 1328. Unpaid debts in Chapter 13 include certain long-term obligations (e.g., a home mortgage), child support or child support, certain taxes, debts for most government-funded or guaranteed student loans or overpayments, debts of death or bodily injury caused by driving under the influence of alcohol or drugs, and debts of reparation or fine, which are included in a penalty for convicting the debtor of a criminal offence. To the extent that they are not paid in full under the Chapter 13 plan, the debtor is liable for such debts even after the bankruptcy proceedings have been closed. Debts for money or property obtained under false pretenses, debts for fraud or counterfeiting in the course of a fiduciary activity and debts for restitution or damages awarded in civil proceedings for intentional or malicious acts of the debtor causing bodily harm or death to a person are settled, unless a creditor commences an action in a timely manner and succeeds in a legal action, to have such debts declared uncollectible. 11 U.S.C. §§ 1328, 523(C); Fed. R. Bankr. p. 4007(c).

Debt relief relieves the debtor of all debts provided for or not authorized in the plan (under Section 502), with some exceptions. Creditors under the Chapter 13 plan may no longer initiate or pursue legal or other measures against the debtor to recover obligations fulfilled. This chapter of the Insolvency Code provides for the settlement of the debts of a person with a regular income. Chapter 13 allows a debtor to keep their assets and pay their debts over time, typically three to five years. Unless the court grants an extension, the debtor must submit a repayment schedule with the application or within 14 days of filing the application. Fed. R. Bankr. p. 3015.

A plan must be submitted to the court for approval and provide for regular payments of fixed amounts to the trustee, usually bi-weekly or monthly. The trustee then distributes the funds to creditors according to the terms of the plan, which may offer creditors less than full payment of their claims. The filing of the Chapter 13 application “automatically stays” (stops) most collection actions against the debtor or its assets. 11 U.S.C. § 362. However, the filing of the petition does not stay certain types of proceedings listed in 11 U.S.C. § 362(b), and the stay may only be effective for a short period of time in certain situations. The suspension results automatically and does not require legal action. As long as the stay is in effect, creditors are generally not allowed to sue or continue lawsuits or garnishments of wages, or even make phone calls demanding payments.

The liquidator informs all creditors whose names and addresses are provided by the debtor of the bankruptcy. No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the standards of confirmation set out in the Insolvency Code. 11 U.S.C. §§ 1324, 1325. Creditors are notified 28 days before the hearing and can object to confirmation. Fed. R. Bankr. P. 2002(b).

While various objections may be raised, the most common are that the payments offered under the plan are less than what creditors would receive if the debtor`s assets were liquidated, or that the debtor`s plan does not block all of the debtor`s expected disposable income for the applicable three- or five-year commitment period. Between 21 and 50 days after the debtor files the Chapter 13 application, the Chapter 13 trustee holds a meeting of creditors. If the U.S. trustee or receiver fixes the meeting at a place where no trustee or regular U.S. receiver is occupied, the meeting may be held no later than 60 days after the debtor is filed. Fed. R. Bankr. P. 2003(a).

During this meeting, the trustee swores the debtor, and the trustee and creditors can ask questions. The debtor must attend the meeting and answer questions regarding its financial affairs and the proposed terms of the plan.11 U.S.C. § 343. If a husband and wife apply jointly, they must both attend the meeting of creditors and answer questions. In order to preserve their independence of judgment, insolvency judges are prohibited from attending the meeting of creditors. 11 U.S.C. § 341(C). The parties generally resolve issues with the plan during or shortly after the meeting of creditors. In general, the debtor can avoid problems by ensuring that the application and plan are complete and correct, and by consulting with the trustee before the meeting. n.

a periodic payment schedule for the settlement of a debt, in which interest and a portion of the principal are included in each payment according to a fixed mathematical formula. Most often, it is used for a home loan or to finance a car or other purchase. By calculating the interest on the decreasing capital and the number of years of the loan, the monthly payments are averaged and determined. Since the bulk of advance payments are interest, the principal only decreases rapidly in the later stages of the repayment term. If the amortization leaves a capital balance at the end of the repayment date, this last lump sum is called a “lump sum payment”. Individuals can use a Chapter 13 procedure to save their home from foreclosure. The automatic suspension stops the enforcement process as soon as the person files the application under Chapter 13. The person can then update the overdue payments over a reasonable period of time.

Nevertheless, the debtor may lose the home if the mortgage company enters into the forced sale under state law before the debtor files the application. 11 U.S.C. § 1322(C). The debtor may also lose the home if they fail to make the regular mortgage payments due after the Chapter 13 deposit.

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