Making Sure Your Chapter 13 Payments Go Into the Right Hands

In a Chapter 13 Bankruptcy, also known as reorganization, the debtor agrees to a court-approved plan to repay a portion of his or her outstanding debts. Eligible creditors are paid specified amounts over the life of the plan, which is three to five years. However, in devising Chapter 13 plans, there are many opportunities for errors. Any problems executing the plan can be costly for the debtor and creditors. Fortunately, there is a tool that can help with the process.

The National Data Center (NDC) is a non-profit organization that was created to help both creditors and debtors manage their interests in Chapter 13 bankruptcy cases. The NDC provides a multi-purpose database designed to maintain the integrity of bankruptcy information in each case and automate routine transactions. Two of the most useful functions of the NDC are proof of claim disclosure and payment tracking.

A fundamental part of any Chapter 13 bankruptcy case is the proof of claim. This is a document or electronic submission in which a creditor asserts that the bankruptcy petitioner has an outstanding debt or obligation. Debtors should pay close attention to these documents as the information is sometimes incorrect. Debts are frequently sold, and the original creditor may no longer own the debt. This can lead to confusion in identifying who should be paid in a Chapter 13 reorganization. Also, a creditor can make a mistake in the amount due. The debtor might end up paying more than required. Finally, there is sometimes fraud in claims. Some unscrupulous actors file false proofs of claims hoping to get paid for non-existent debts.

The NDC database manages proofs of claims. The system can track changes in ownership of individual debts. This allows debtors to easily cross-check their own records to ensure that creditor information is legitimate and accurate. The ability to match information in the bankruptcy petition, the NDC and the debtor’s own records ensures that the plan is legally valid and that all eligible creditors are paid the proper amount.

NDC also provides automatic payment tracking. This helps assure that the creditors receive the periodic payments due under the plan. Of course creditors want to be paid. Debtors too want to keep all payments current. This allows the debtor to successfully complete the Chapter 13 plan and avoid issues with priority creditors such as the Treasury Department. A non-payment alert can allow the debtor to address any deficiency before it becomes a major problem that could jeopardize the plan.

Jeff Field & Associates is a law firm with a large consumer bankruptcy practice. With six offices in the Atlanta, Marietta and Athens areas of Georgia, our attorneys represent many individuals in Chapter 7 and Chapter 13 bankruptcy cases. Our attorneys have the skills and experience to achieve the best possible results. If you are struggling with a debt problem, contact us online or call 404-381-1278 for an initial consultation.