Chapter 13 Wage Attachments Concerns

Chapter 13 bankruptcies in the Western District of Pennsylvania typically require the debtor to submit a wage attachment to fund their Chapter 13 plan.

This sometimes makes prospective filers nervous. Will this wage attachment leave them with enough money each month? Will it reflect badly with their employer? Can it be stopped? These are all reasonable questions.

First off, the amount of money coming from your wage attachment will be split from each paycheck, so it will not completely wipe out an entire paycheck. Now, the amount attached will be determined by a number of factors, so the difficulty of meeting the payments will depend on how much is owed. However, as your attorney I will explain exactly what makes up your payment and answer any questions about it. If a Chapter 13 payment is completely unfeasible, it will probably not be worth filing. So, it is important to understand why it is what it is.

Second, employers and payroll departments almost certainly will not raise any issues. Large employers are quite experienced with processing these wage attachments. In filing cases for almost 15 years, I have not experienced any issues with an employer processing a wage attachment. It is a standard procedure, and it helps the filer fund a plan that is intended to help them. Employers shouldn’t want to make this more difficult (and almost never do!)

Finally, a Chapter 13 bankruptcy is a voluntary act. If you don’t want to do it anymore, you don’t have to! A Chapter 13 bankruptcy can be ended at any point. There will never be any issue where the bankruptcy wage attachment is coming out when you don’t want it to. Now, this would end the protections of Chapter 13 bankruptcy, but you are never stuck.

If you are in Chapter 13 bankruptcy, or considering it, and you have questions about the wage attachment process, call me at 412-414-9366.

Chapter 13 Wage Attachments

Chapter 13 bankruptcies require payments to be made to the Chapter 13 trustee. The trustee then disperses money to your various creditors, in amounts that are determined by bankruptcy law and your bankruptcy plan. How do you pay the trustee? If you are employed, my office is required to file a wage attachment.

A wage attachment motion is filed with the bankruptcy court after the initial case filing. Court permission is required to attach your wages, but this is pretty much a formality. Once the court approves the motion, an order signed by the bankruptcy judge is sent to my office. I then serve the order on the payroll department of your employer, along with other information to make sure they properly identify you.

The wage attachment, once in effect, will deduct money from your pay every pay period. Even though your bankruptcy payment is calculated on a monthly basis, the payments will be deducted each pay period, whether you are paid monthly, bi-weekly, or weekly. The money is directed to the trustee, who actually administers your case payments. This will continue through the completion of the bankruptcy case.

You will be responsible for making any payments not directly deducted from your paycheck. So, if it takes several weeks for your payroll department to process the order, you are still required to make the payment. Contact us for instructions how to do so.

As long as your employment is steady and uninterrupted, there should be no problems with your wage attachment. However, if you change jobs, or lose your job, you will need to inform your attorney immediately. Your wage attachment will need to be terminated (which requires another motion and service) and a new wage attachment must be filed. This should be done as quickly as possible to avoid any gaps in your payment. Once again, payments not made through the wage attachment must be made directly.

Clients are often concerned that the wage attachment will affect their employment in some way. It will not. An employer cannot sanction you, and in practice, they rarely if ever care. Most payroll departments process the orders with no confusion or problems. Wage attachments are not allowed on pensions, or disability payments. In these cases, payments must be made directly to the trustee.

The prospect of a wage attachment sometimes causes trepidation on the part of my clients. However, there is no reason to be concerned. The process is efficient, and secure. Case with wage attachments have much higher rates of success, as they greatly simplify the process. I will be happy to answer any questions related to the wage attachment requirement.

Wage Attachments in Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is funded by the income of the debtor. Income can take many forms, including Social Security, unemployment, or worker's compensation payments. Income can even be a contribution towards the household expenses from a third-party such as a parent. But, income is generally in the form of paychecks from steady employment.

The Western District of Pennsylvania trustee's office requires all regular pay to be "wage attached". This means it is required that your Chapter 13 payment comes directly from your paycheck as a deduction, much like taxes or deductions for insurance or retirement. Each paycheck, your Chapter 13 payment is sent from your payroll department directly to the Trustee.

This is sometimes initially off-putting for bankruptcy filers. However, it is actually quite beneficial and convenient. First, it makes things simple. All payments must be made for a Chapter 13 plan to succeed. This being the case, it's easier if these payments are done for you. There is no requirement to mail in money orders every month. There is no forgetting to make a payment.

A second advantage is it removes the possibility of error or lost payment. The Chapter 13 Trustee office is the administrative wing of the Federal Bankruptcy Court system. They don't screw up, and they don't lose payments. If there are any issues with a payment, it is professional office dedicated to fixing the problem.

How does the wage attachment work? Your attorney will file a motion with the Bankruptcy Court to attach your wages, which is then signed by a bankruptcy judge, and served on your employer's payroll department. As soon as the payroll department processes the Court order, the wage attachment begins. It's that simple. The whole process sometimes takes less than a week.

Some filers worry that their employer will be angry or potentially even fire them for filing bankruptcy, and they fear the wage attachment will tip the employer off. This is just not the case. Employers have no reason to care... you are not filing bankruptcy on them! My clients have had no issues with employers and wage attachments. It is just not a problem.

If you have questions about Chapter 13 bankruptcy, or wage attachments, contact us to set up a free consultation.