Your Chapter 13 Plan Payments

I have seen statistics on the numbers of failed Chapter 13 cases and successful Chapter 13 cases.  The number one reason a debtor’s case is dismissed is for delinquent Chapter 13 plan payments.  In those cases, the debtor has been authorized to pay the Chapter 13 Trustee the Chapter 13 monthly plan payment.  Remember, a Chapter 13 is for individuals with regular income.  After the debtor becomes three payments, sometimes fewer, delinquent on the Chapter 13 Plan Payment, the Chapter 13 Trustee files a Motion to Dismiss the debtors case.  The debtor does have options, such as paying the debtor’s attorney to file a motion to modify the Chapter 13 Plan and step up the plan payment to pay out the delinquents amounts on or before month 60, the maximum amount allowed by the U.S. Bankruptcy Code.  The step up payment can cause a hardship on the debtor and his/her dependents, resulting in the debtor’s case being dismissed after the modified plan is approved by the bankruptcy court.

It is probable, however, the debtor would be allowed to re-file a Chapter 13 case to protect his/her assets and discharge debts.  I would strongly urge any debtor in these circumstances to authorize the Chapter 13 Trustee to withhold the monthly Chapter 13 Plan Payment from the debtor’s pay check.  The entire monthly payment is not taken out in the first pay check the debtor receives in a given month.  Instead, the Chapter 13 Trustee divides the monthly plan amount by the number of times the debtor is paid.  Thus, if the debtor is paid semi-monthly and the Debtor’s plan payment is $400, the debtor’s employer will the Trustee $200 the first pay date and $200 the last pay date.

Please click here for a link that I read I think will help you to understand more about wage withholding. This linked article uses the term wage garnishment, however, in this context wage garnishment and wage withholding order are interchangeable.

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