Chapter 13 Success Enhanced With Voluntary Automatic Wage Deduction ...

Most Chapter 13 bankruptcies fail. Most debtors do not pay their required payments to the Chapter 13 trustee throughout the term of their plan, and when payments fall behind their bankruptcy is dismissed without a discharge. It takes financial discipline to consistently budget money for Chapter 13 plan payments.

Chapter 13 success is greatly increased when the debtors pay the trustee through automatic wage deductions so that the debtor’s employer deducts the  required plan payment from the debtor’s pay check. Our Chapter 13 trustee announces at every meeting of creditors that 80% of debtors who pay with wage deduction orders succeed in Chapter 13 and get a discharge while only 30% of debtors who do not use wage deduction are successful. Many people file bankruptcy because they previously lacked financial discipline to minimize debt or save for emergencies, so it is not surprising that those people cannot budget money for Chapter 13 plan payments I advise all my Chapter 13 clients to use wage deduction payments if they can do so.

Many Chapter 13 debtors cannot practically use wage deduction payments. For example, self-employed business owners are not candidates for wage deduction because if their monthly income fluctuates.  My experience is that self employed people, or any persons with unpredictable income, do not do well in Chapter 13 bankruptcies. The bankrutcy court will issue wage deduction orders upon the debtor's request. the employer is required to comply with the court's wage deduction order.