23 Apr Wage Garnishment for a Chapter 13 Plan Payment Increases Success Rate.
If you are filing a chapter 13 bankruptcy I strongly encourage you to use wage garnishment instead of a direct payment as this will increase your success rate. Why, because if you use a wage garnishment you are forced to place yourself on a budget in order to make it through your chapter 13 bankruptcy.
Too many times a debtor honestly believes that they can successfully budget and pay the monthly payment to the chapter 13 trustee. More often than not life gets in the way and a debtor will pay everything else first. When this happens the plan payment does not get made because there is no money left at the end of the month.
Fast forward 3 – 4 months and let’s say the debtor is you, it has now become habit for you to not make your plan payment. You have gotten by without paying the past couple of months without anyone saying anything so why not go one more month? Because at this point the chapter 13 trustee will file a Motion to Dismiss for Failure to Pay.
This now means that one of four choices will need to be made. You can choose to increase your ongoing plan payment to the trustee through an amended plan and suspend the arrearages that are due and owing. You can choose to pay a lump sum payment to the trustee or they may allow you to bring the account current over a short period such as 3 months. You can choose to suspend the arrearages if your plan is running less than 60 months, if there is enough room. Finally you can choose to do nothing and your case will be dismissed and all the creditors can come back after you.
If you choose one of the first three choices listed above it will generally cost you additional attorney’s fees as this will require more work from your attorney. The increased attorney’s fees in some cases can lead to you not completing your case because of the resulting increased plan payment. If you choose nothing this too may cost you more attorney’s fees because eventually you will be sued in civil court and the creditor will take a judgment which includes attorney’s fees for the creditor. The bottom line is a chapter 13 bankruptcy requires discipline and perseverance.
If you are the type of person who is very disciplined then maybe you can make the payments on time each and every time. However if you are like the rest of the population and would like some help in achieving success with your chapter 13 bankruptcy I recommend that you use a wage garnishment so there will be no question as to whether or not your plan payment will be made.
Would I use wage garnishment if I were filing a chapter 13 bankruptcy? Yes, I can honestly say that I would because I would value the success of my bankruptcy more than the concern of whether or not my employer knows about my personal financial life. The goal of a bankruptcy is to give you a fresh financial start. Why not use every tool available to make it a success?
Remember that knowledge is power and the more knowledge you gain about bankruptcy and financial management the more successful you will be in regaining financial control.
Written by Kansas City Missouri Bankruptcy Attorney, Rachel Lynn Foley.