By: Daniel Stone
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Warning signs to look out for using wage orders in Chapter 13
Article written by Columbia, SC bankruptcy attorney Daniel Stone
Many of you know that I highly recommend wage orders for clients filing for Chapter 13 bankruptcy. I have a blog on this website that covers the benefits of agreeing to a wage order in a Chapter 13 bankruptcy. What is a wage order? A wage order in a Chapter 13 bankruptcy allows an individual to voluntarily agree to having their Chapter 13 Trustee payment deducted from their pay check. In most Chapter 13 cases, the wage order works very well and I highly recommend it for most of my clients. However, there are a few pitfalls. The following are some of the pitfalls I have seen:
1. Sometimes the employer is slow to react to the Wage Order. This means the debtor is responsible for making the Chapter 13 bankruptcy plan payment until deductions are started. In some cases, the debtor either forgets or doesn’t make the payment and the case is dismissed.
2. A debtor decides to dismiss his or her case but the wage order payment continues to be withdrawn. Usually after a Chapter 13 case is dismissed or receives a discharge, the employer is notified quickly to stop sending payments. However, in a small percentage of the cases, the payment continues for a few additional weeks before it finally stops. Please note the Chapter 13 Trustee will send you back these funds. That being said, it is an inconvenient issue to deal with in a small percentage of cases.
3. Employer fails to send the proper amount. In many Chapter 13 cases, the plan is either increased or decreased for a specific reason. When this occurs, the employer is notified of the change. In some cases, however, the employer fails to send the right amount. This is why the Chapter 13 Trustee and I recommend that you check your paycheck on a regular basis to make sure the correct amount is deducted. In addition, I recommend that you periodically check the Chapter 13 Trustee website to check the Trustee payment receipts.