Interviewer: How does this work for married couples?
James Logan: To stop a foreclosure, if the house is in both the husband and wife’s name, we only need to file for one either the husband or the wife. In many cases, it’s better to only file for one because in that way, if someone does go wrong with the case, then we can file for the other spouse to give them basically a second bite of the apple, a second chance to save their home because only one person needs to file. Sometimes, we run in situations where people are separated and one spouse is staying in the house and they want to hold on to it, so we can file for just that spouse and we don’t need to other one to actually stop a foreclosure. If you’re going to do a chapter 7; many times, they’ll come in and we’ll ask them if their husband and wife have debts too because it’s basically the same price to file a joint case in a chapter 7 as an individual one. So, if your spouse has debts too, we may as well file a joint case in that case.
The Role and Selection of the Appointed Trustee in a Bankruptcy Proceeding
Interviewer: The appointed trustee, who is this person and how they get selected?
James Logan: In a chapter 7, the trustees are appointed by the court, and in a chapter 7 the trustee’s job is to find assets that he can sell to pay off some of your debts or all of your debts. And in the vast majority cases, 95 per cent of cases or more, there are no assets and the chapter 7 trustee will get a fee from the court and he closes out the case and that’s it. In small percentage of cases, there will be an asset or something that the trustee can sell to raise money and in that case, he can file a petition with the court to get fees and commissions from those assets and that’s basically how he gets paid. There are about 14 different chapter 7 trustees in Baltimore and they all have kind of different take on how they do things. Some of them are very easy to get along with, some of them are more difficult to get along with but that’s basically their job is to look for assets they can sell to pay off your debts.
The Appointed Trustee Does Not Care About the Income of a Person and Is Only Interested in Assets they Can Sell
They really don’t care what you make and what your income is, they’re only interested in assets that they can sell. In chapter 13, they’re more interested in your income because their job is to get as much money as they can for your unsecured creditors, so they want to see what your income is and how to document your income and they will view all those pay stubs or other documentation to make sure you’re paying as much as you can to your creditors. My job in a chapter 7 is to make sure that you don’t have any assets that we can’t protect in a chapter 7 and that you get a no asset case and in chapter 13 is to make sure you pay as little to your creditors as we can get away with. So, that’s our job.
Interviewer: So, the payments are monthly, is that correct?
James Logan: In chapter 13, yes, monthly payments are made to the chapter 13 trustee.
Retirement Benefits Can be Utilized to Make Monthly Payments in a Chapter 13
Interviewer: What if I was someone that was only receiving retirement benefits, and that is my main source of income? Could I utilize those funds to pay for my payments?
James Logan: Sure. We have chapter 13 that are funded by all kinds of income, retirement, jobs, friends and family. A lot of times, we’ll have a case where you have 4 or 5 different family members living in a house and they all contribute something to try to save the house and keep a roof over their head. Especially, in a first time filed chapter 13, the trustees aren’t really concerned where the money is coming from as long as the payments are being made, the same thing with the bankruptcy judges.
A Trustee Wants People to Retain their Homes and Repay the Creditors as Well
They want to see these chapter 13 cases work and they want people to hold on to their house as they want creditors to get paid, so they will really bend over backwards in a first time case to try to help people and try to make sure the cases work. When you get to the third, fourth, fifth time filing, then they get a little more difficult. The first time filers or even second time filers, everybody wants to see the cases work and they want to see you save your house and they want to see the creditors get paid.