In this week’s video, Mr. Mayer explains how you will fund your Chapter 13 bankruptcy and how easy it is. He also explains why a wage assignment is in your best interest to make your Chapter 13 payments and how you will be protected under bankruptcy law.
Today I'd like to talk a little bit about funding Chapter 13 plans.
Chapter 13 is about paying money to a trustee to fund a plan that pays for your house, car and other bills.
If you are working, the Chapter 13 trustee and the court system likes a wage assignment. A wage assignment is not a garnishment.
A lot of clients ask me will I lose my job? And the answer is no. Federal bankruptcy law prohibits any discrimination for a wage assignment under Chapter 13.
A wage assignment is strictly voluntary - it is not a wage garnishment, which is involuntary.
Wage assignments are highly protected under the bankruptcy code.
Exceptions to Wage Assignments
Now, there are a few exceptions. For example, if you work for an extremely small employer that is not equipped to handle the bookkeeping involved. Or if you handle money such as if you work for a bank or a credit union. Generally, they'll allow some exceptions to that.
Most employers we found are very used to wage assignments. They use the same process, which they use if you owed child support or any other mandated payment.
Benefits of a Wage Assignment
It's really simple, the order simply goes to the payroll, there's an entry made, and the order comes out of your paycheck.
By doing this, you avoid having to mail money to the Chpater 13 trustee, and the payments are made directly from your paycheck. It's accounted for and you have a record through your employer.
We find that approximately 80% of cases who do not have wage assignments generally fail because of some unexpected items will come up which will put your Chapter 13 payment behind and unexpected expense.
On the other hand, if you don't make your Chapter 13 payment, you're in danger of losing your car, your home, or having your Chapter 13 case dismissed.
We think a wage assignment is a good thing - you can't be discriminated against and it's an excellent vehicle to fund your Chapter 13 plan.