Tuesday, January 15, 2013

Chapter 13 "Wage Order"

If you file Chapter 13 in Oregon or Washington your Trustee is the person who accepts your payments and distributes them to your creditors.  It has become well established that the Debtors who are the most successful in making their chapter 13 payments have the payments taken out of their paychecks.  This isn't technically a "garnishment" but it works the same way. The employer is Court ordered to withhold the payment from the debtors check and mail them directly to the Trustee. This is known as a Wage Order.

Wage orders used to be optional, but a few years back the bankruptcy Judges made it mandatory unless the debtor has a very good reason to have it waived.  If the waiver is granted the debtor will need to mail payments in each month to the Trustee by way of cashier's check or money order.

The most typical reasons that the wage order waivers are granted are because the debtor has been at their job for only a short period of time or the debtor is in charge of finances. Under these circumstances  since their is a chance the bankruptcy could be held against the employee the Trustee may grant the waiver and the debtor may mail payments in directly.  If the debtor begins missing payments the Trustee may require the wage order to be filed or the case be dismissed.

If you ask for a waiver of the wage order because you think it could harm your employment position the time to ask for the waiver is at the first meeting of creditors.  If the Trustee denies the waiver you can then appeal the decision to the Judge at your confirmation hearing.