Chapter 13 dismissed in error

[2BetterTimes]

We received a Notice to Dismiss our case from the Trustee in November 2011 because we were three months in arrears (apparently the grace period). I sent in a bank check to cover the arrears within the stated time period via the bank's online payment system, rather than a money order/cashier check. My thought was that this check provided the same protection as a money order, etc., and since I was without a vehicle to get to the bank, it would get there in time.

On Dec. 6th, I received the check back from the Trustee stating that as of this date, they could not accept this form of payment. So, I had to go to the bank, get the cashier's check and mailed it on the 7th. Apparently this was not noted as being a "replacement" check and our case was dismissed because it was posted after the deadline.

Well, lo and behold, the credit union repossessed our truck in the middle of the night. We then received a notice from them that the vehicle would be sold at auction after 1-19-12. Finally, our case will be reinstated. I let the CU know this and asked, respectfully, that the auction be delayed. The problem is that I cannot get a definitive answer that the auction will be delayed and there are also personal belongings in the truck.

Would we receive a notice to get our belongings before the auction? My emails to them have been passed to numerous people, but no one will tell me if the auction will be delayed.

[justbroke]

If your case is actually reinstated, then you should be able to send the Order Vacating Order Dismissing Case or Order Re-instating Case to the CU. The Order should have language that re-instates the automatic stay. The CU could be in serious trouble if they sell the car after being noticed that the case was in fact re-opened and the automatic stay is back in full effect.

Until that happens, the automatic stay coming back into affect, the CU is free to complete the sale. Usually, the lender will box up your personal belongings and ship them back to you.

My only wish for you and others is that we all pay very careful attention to what forms of payment the Chapter 13 will accept. In Region 21, the Trustees will only take certified funds (bank checks, cashier's check, teller check), employer checks (for wage orders), ACH (automated clearing house), and money orders (and only from reputable places like USPS, FDIC insured banks, etc). They do not take any personal check, even if your bank sends it via the so-called BillPay payment services.

Unfortunately, the banks leads people to believe that the BillPay service will always be done by ACH (automated clearing house)/electronic. In fact, if the payee is not another bank (credit card, etc) or well known company, the bank merely just sends a bank draft drawn on your account. That draft is no different than you writing a check and this is why the Trustee's "lock box" provider doesn't accept them.

[2BetterTimes]

Thank you so much for your reply. The CU sold our vehicle at auction but the good news it sold for way more than what was owed. Are these proceeds reportable to the trustee since a request for reinstatement of our case is in the works? Do we have to give them the money? Or, better yet, can we use this money to get caught up? I am talking about $10K!

Looking back, this was a blessing in disguise.

[justbroke]

Thank you so much for your reply. The CU sold our vehicle at auction but the good news it sold for way more than what was owed. Are these proceeds reportable to the trustee since a request for reinstatement of our case is in the works? Do we have to give them the money? Or, better yet, can we use this money to get caught up? I am talking about $10K!

If your case is reinstated and the vehicle was already exempt, or if you could exempt it anyhow, it should not matter. Probably Despritfreya would have more ideas for Arizona.

[despritfreya]

Keeping the excess proceeds will depend upon whether or not you properly claimed the exemption. You need to see what Schedule C states.

Under Arizona law you can exempt up to $5k in a vehicle. If you are married the exemption ($5k for husband and $5k for wife) can be stacked into one vehicle. So, if you are married and claimed the full $10k exemption then the excess proceeds belong to you up to $10k. If you only claimed the $5k exemption, you get $5k and the balance goes to the Trustee for the benefit of your unsecured creditors.

A problem you may face, assuming your case is reinstated, is where the CU sends the funds. It may send the $$ to the Trustee, not you. I simply do not know what it will, or should, do.

Now, the next question is, what is the hold up in reinstating the case? Once you bring your payments current you should be stipulating with the Trustee for the reinstatement. Who is drafting the Stipulated Motion to Reinstate and the Order Granting the Motion? Once the case is reinstated you probably have to modify/amend your Plan to remove the funding that was going to the CU for the vehicle. Further, if the vehicle was the only reason you did a 13, maybe you don't need it anymore.

I assume you do not have an attny. The Trustee’s office cannot give you legal advice so you may need to consult with an attny to figure out your next steps.

Des.

[justbroke]

Great points des!