The Process When A Debtor in the Northern District of Georgia Wrecks Their Car While in Bankruptcy:
For some reason this scenario seems to create unecessary delay and drama in a Chapter 13 case for no reason. Insurance agents need to understand that EVERY bankruptcy is different so what the process is in Los Angeles is different that here in the Northern District of Georgia.
When a person is in a chapter 13 case they are paying their secured cliams, such as a car, through their case. The car creditor files a claim in the case and the trustee pays this claim each month per the plan,
If a client is involved in a car accident and their car is totaled then the insurance company, as they normally would, need to pay the car creditor DIRECTLY for payment on the claim. THERE IS NOTHING THAT WE AS DEBTOR ATTORNEYS DO! THERE IS NOT A SPECIAL LETTER FROM THE JUDGE! THERE IS NO COURT ORDER DIRECTING AN INSURANCE COMPANY WHAT TO DO!
You can contact the car creditor directly, get the payoff, and then pay them what they are entitled to under the policy. JUST AS YOU NORMALLY WOULD.
What The Insurance Company Needs to Do:
As stated above, our office has nothing to do with this process. We don’t pull a payoff, you do that by contacting the car creditor. We don’t file a motion to get you a court order because that is NOT required in our district.
If you want a “Letter of Direction”, which is just a response from the client’s trustee telling you to pay the creditor directly, then feel free to contact the trustee directly. The two trustee’s in our district are:
If there are any funds left over after you paid the claim that should be paid to the debtor then you need to pay those funds directly to the Chapter 13 trustee. If the debtor wants to keep any of those funds THEN we will get involved to make that request on behalf of our client.