November 24, 2017

What Happens After Your Chapter 13 Plan is Confirmed?

When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.

In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.

While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan. [Read more…]

Pay Attention to Your Chapter 13 Payroll Deduction

In the Northern District of Georgia, every Chapter 13 case must be filed as a “payroll deduction order” case.  In other words, you must fund your Chapter 13 with a payroll deduction.   In my experience the trustees will allow direct payment of Chapter 13 plan payments only when a debtor is self employed or if the debtor can convince the trustee that the debtor’s job would be in jeopardy if the employer received a payroll deduction order.

Not surprisingly payroll deduction cases work better – if the funds to pay your Chapter 13 come directly out of your paycheck, then there is one less variable to go wrong in your Chapter 13.

However….I have seen far too many cases in which a debtor got behind on his obligation to the trustee even when there was a payroll deduction.  Why?  Because the employer was withholding the wrong amount.

Payroll deduction orders are filed electronically.  When I file a case, there is a data entry screen for payroll deduction orders.  I fill in the appropriate data and the clerk of court sends out the deduction order.

In many Chapter 13 cases, however, the Chapter 13 plan I originally file on behalf of my client will need to be amended.  Many times, this amendment involves increasing the plan payment.  When that happens, I will file a second, or a third payroll deduction order through the electronic court filing system.  Each time the clerk of court mails out the new order.

Sometimes, the employer gets a second or third order from the clerk and does not recognize that the amount has changed.  Some employers ignore the second or third order altogether.  I have also seen situations in which an employer withholds money and sends it in for months at a time, then arbitrarily stops honoring the order, or arbitrarily starts withholding and sending in a random amount. [Read more…]

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