How are Chapter 13 Payments made in Oregon?

When someone files for Chapter 13 bankruptcy protection in Oregon there is a monthly payment that is made to a bankruptcy Trustee.  One of the biggest jobs for a Chapter 13 Trustee is to distribute this money to the creditors in the case.  The first payment from the Debtor is due 30 days after the case is filed.

In Oregon, the Courts now require that payments are made by a "wage order".  A wage order is basically a directive to the debtor's employer to withhold the payments from the debtor's paychecks and forward the funds on to the Trustee.  It is similar to a garnishment - a court order to withhold funds from an employee and forward them to a 3rd party.

A debtor can ask the Trustee to waive the wage order requirement. The most common reason for the wage order to be waived is if the debtor is self-employed.  If the debtor is employed it is very difficult to get the wage order waived.  However, if the debtor can show that if their employer knew that they filed bankruptcy it would adversely affect their employment a wage order may be waived.  It is not enough that the debtor be embarrassed about the employer knowing - they must prove that it could actually affect their job. A common example is if the debtor/employee handles money for the company, or the debtor/employee was recently hired.

If the wage order requirement is waved, then the Debtor will mail in monthly payments to the Trustee each month by money order or cashier's check.

Wage orders used to be voluntary in Oregon Chapter 13 cases.   But, statistics showed that debtors with wage orders had a much better chance of completing their case than those who were mailing them in.

Many of my clients really like having the wage order in place because they don't have to worry about missing a payment. They simply need to keep an eye on their paycheck to make sure the chapter 13 payments are coming out of their checks.

Do I have to pay off all of my creditors if I file a Chapter 13 bankruptcy in Oregon?

When clients come in to my office and I discuss Chapter 13 a common question I get is "if I file Chapter 13 I have to pay everyone back, right?" The short answer to this question is "probably not."

Our firm files a lot of Chapter 13 cases in Oregon. It is fairly rare that our Chapter 13 clients are required to pay back all of their debt in Chapter 13. There are several factors that go into calculating a monthly Chapter 13 payment, including: a debtor's income, expenses, amount of non-exempt assets, amount of secured and priority debt, and many more.

In some cases a client can reorganize secured debt and at the same time get protection from unsecured creditors. I commonly have clients who enter into Chapter 13 and are able to propose a payment that is less than what their current car payments are. And, the car loans can be restructured and be included in the Chapter 13.

For example, a client could have a car payment of $500/mo and also have $30,000 in credit card debt. It may be possible for this person to file Chapter 13 and restructure the car loan and end up paying $400/mo in their case and be able to keep the car and get protection from the credit card debt.

If you are experiencing overwhelming debt, and could possibly benefit from a Chapter 13 you should seek the advice of an experienced Chapter 13 attorney.

More information about Chapter 13 in Oregon and bankruptcy in general can be found at our website: www.pacificbankruptcy.com.