Chapter 13 bankruptcy allows debtors with a source of income to discharge many types of debts. In a Chapter 13 bankruptcy, your debts are consolidated into a repayment program that is paid back over three to five years. The Trustee then distributes these payments to your creditors. However, it is crucial that you make your payments to the Trustee on time to reap the advantages of a Chapter 13 bankruptcy. One way to do this is with a wage order.
There are multiple benefits to a Chapter 13 bankruptcy. For instance, you could stop the foreclosure process on your home and become current on delinquent mortgage payments. You might also be able to strip a second mortgage.
How Your Wage Order is Helping You Complete Your Bankruptcy
With a wage order, the bankruptcy court requires your employer to submit your Chapter 13 payments from your pay check. Wage orders make Chapter 13 payments automatic. If you are paid twice a month, then half of your monthly Chapter 13 payment would be taken from the first paycheck and the rest from the second paycheck. On the other hand, your employer would submit the full monthly payment if you only receive one paycheck per month.
You are statistically more likely to complete your Chapter 13 case by using a wage order. The vast majority of Chapter 13 dismissals occur due to nonpayment. By receiving a wage order, you may be less tempted to spend the money for your Chapter 13 payments on other expenses.
Our law firm published a prior newsletter on the statistics behind wage orders and Chapter 13 bankruptcy completion rates. According to studies, bankruptcy districts with mandatory wage order requirements have higher Chapter 13 completion rates. Other districts only implement wage orders under specific circumstances, such as when borrowers fall behind on payments.
What If I Cannot Afford My Chapter 13 Payments?
The last thing you should do is wait to seek a modification if you are unable to make payments. Depending on your individual circumstances, additional options may be available for your situation. For instance, you may be able to convert your case to a Chapter 7 bankruptcy.
We understand that sometimes life gives you lemons. If you fall behind on payments during your Chapter 13 case, whether from job loss or other factors, then you should immediately contact your attorney. There are cases where you can modify or temporarily pause your Chapter 13 payments if they become unaffordable.
At the Sader Law Firm, we have $0 Chapter 13 filing options available if you receive regular income and are willing to use a wage order or direct pay. We encourage you to look into this option if you receive regular income and are struggling to make payments on debts.
To speak with a Chapter 13 bankruptcy attorney at The Sader Law Firm, call (816) 281-6349 or use our online case review form.