Submitted by Rachel R on Wed, 12/04/2013 - 10:48am
Payroll deductions can also include chapter 13 plan payments
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If you’re struggling with debts and have collectors pursuing you, likely you’ve had calls at work that embarrassed you. You may be worried that your employer will find out you’re in financial trouble and assume the worst about you. If you let your debt crisis deepen, they will find out if you're hit with a garnishment order. Don’t let it get this far. Instead, if you want a chance to reorganize your debts, file a Chapter 13 bankruptcy.
If you are committed to paying the majority of your debts and want to try and keep your home and car that are secured by a loan, a Chapter 13 may be a better solution for you than a Chapter 7. And although you likely don’t want your employer to know that you’re in bankruptcy, submitting your repayment installments through payroll deduction is the best way to ensure your success.
Left to your own devices, you may not follow up on your payments as you should. Even if you have the best of intentions, if something crops up, you may choose not to pay your installment because you prioritize a car repair or other incidental. And if your financial crisis is due (in part) to you being irresponsible with your money, this move can help keep you on track.
The best way to ensure that your Chapter 13 bankruptcy is fulfilled successfully is to enroll for auto debit or execute a payroll order. The difference is that auto debit will draft directly from your bank account and the funds will be sent to the Trustee who will then distribute the money to your creditors. But if you change banks or take the money out of your account prior to the deduction, it will reject.
Balancing your chapter 13 payments can be a challenge without a payroll order.
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It’s preferable to have the money deducted from your payroll so that the Trustee gets paid first. This will give you the best chance of fulfilling your Chapter 13 repayment plan. If you miss even a single payment, you put your bankruptcy at risk. It’s very likely that one missed or late payment will result in your plan being dismissed and leave you back at square one with your debts.
If your Chapter 13 plan fails, expect your creditors to be back on your case in full force (or worse) as soon as they receive word that you are no longer protected from collection efforts. This is not what you want at all! Our experience with clients over the years has been that those that use payroll deduction have the greatest chance of successfully completing their plans and getting the fresh start they need!
What also makes payroll deduction easier to cope with financially is that it divides your payments into smaller, more manageable chunks on a per payroll basis. This can be easier to work around budget-wise than one large payment. This reduces the risk that you’ll overspend and then not be able to submit your monthly installment. And you needn’t worry about your employer knowing you are in bankruptcy.
With a Chapter 13, you are accepting responsibility for getting in over your head and are working to make it right. As a general rule, an employer is not likely to terminate you for filing bankruptcy. And depending on the payroll policies and the size of your company, it’s likely that only the payroll processor or accounting department will even know that you have a pay order established!
To find out more about Chapter 13 and how it can help you deal with your debt dilemma, contact the law offices of John T Orcutt. We are experts in North Carolina bankruptcy and are ready to help you get your finances in order. Now is the perfect time to take advantage of a free consultation and get a fresh start so you can go into the new year with peace of mind about your finances!
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