Buffalo Grove Bankruptcy Attorney Recommends Payroll Control

Buffalo Grove bankruptcy attorney states that when you file a Chapter 13 bankruptcy case, you are required to make payments each month to a Chapter 13 trustee.  The Chapter 13 trustee then administers that payment much like a dealer in poker, to the individual creditors pursuant to a hierarchy as determined by the Bankruptcy Code and your Chapter 13 plan which is confirmed by the court.  

If you are working at a job, I would strongly recommend that you go on what’s known as payroll control.  Payroll control is where the amount payable to the trustee is automatically deducted from your pay with the frequency of your payment.  So for example, if you are paid every other week, your employer will deduct a certain amount every other week and send that directly to the Chapter 13 trustee. 

What payroll control does is actually an sure that your Chapter 13 plan payment is going to be made on time every time provided you continue to stay employed.  This is good for two reasons.  First, you are insured that the trustee will not be bringing a motion to dismiss for failure to make planned payments.  And two, you are left with the remainder of your income to budget towards the other items in your Schedule J budget.  If you do not go on payroll control, there is a greater likelihood that you would default in planned payments because you will use the money for something other than what it is intended and then short the Chapter 13 plan payment. 

If you are someone who is self-employed or if you only have Social Security or disability or unemployment income, then payroll control is not an option for you.  At the present time, the federal government will not deduct anything out of Social Security.  I was hoping in recent weeks that the Social Security Administration would allow for the automatic deduction of payroll control or Chapter 13 trustee payments to be deducted directly out of a Social Security benefit.  After all, the Social Security benefit is electronically deposited into a client’s checking account.  I was hoping that the government would be willing to cut a certain amount to the Chapter 13 trustee. 

But in any event, payroll control is something that I strongly recommend.  Payroll control is a great way to make sure that your Chapter 13 plan payment is going to be successfully made and that you have one less thing to worry about when you are dealing with a Chapter 13 bankruptcy case. 

For people who are not working in a regular job and they do not have the ability to go on payroll control, those individuals have to make a cashier’s check or a money order each month and send it to their Chapter 13 trustee.  You can see over a course of a 3 to 5 year.  How this could pose a problem.  For one, important events might come up where you might want to divert the money that should go to the Chapter 13 trustee towards other creditors or other expenses.  By being on payroll control, you don’t have the ability to diverge or miss allocate those funds.  Your employer will automatically send the deduction to the Chapter 13 trustees so you are insured that you will not have a trustee’s motion to dismiss coming up anytime soon.  Also, statistics have shown that people who are on payroll control have a much greater likelihood of a successful Chapter 13 case than those who are not on payroll control.