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.