A pay order must be in effect if you file chapter 13 in Cleveland. This means that your chapter 13 plan proposes you pay from your income on a monthly basis. This does not mean you just make one payment a month and all is well. The plain fact is that you are likely in this mess precisely because you did not make one or more monthly payments on important things like your:
- home loan
- car loans
- tax bills
- court ordered support, and/or
- other unsecured obligations
Think a moment about the taxes that come out of your check. Ever wonder why the government doesn’t let you just pay them? It’s because they know if they don’t get the money before you do, you will have better uses for it, and when tax time comes the money will be gone. Same thing with chapter 13 plan payments. There are a variety of ways you can make your plan payments:
- Pay order deduction just like your taxes. For the same reason too. This is the preferred method and if you are working, the Cleveland Chapter 13 Trustee requires a pay order
- The Chapter 13 Trustee in Cleveland has started an ACH bank debit program. This authorizes a direct debit from you checking account. He says this is a supplement to the wage order in the event your income is not enough to meet your monthly plan payment. It gives him a shot at your non-filing spouse’s income from the bank account.
- Self pay plans. This is when you do not have wage income, as in self employment. Warning, self pay plans are rarely a success. Of the hundreds of chapter 13 cases I have filed only two self pay plans completed successfully. Both were woman debtors.
The only way your employer will ever find out you file for bankruptcy is either you tell him, or it is a chapter 13, and there is a pay deduction order. Federal law protects you from firing for filing a bankruptcy. However, some clients still do not want their employer to know. The policy of the Cleveland Chapter 13 Trustee is that if there are wages, a pay order is needed.
I wish I had an easy answer for this dilemma. The bottom line is that for your case to succeed, you must fund the plan. That means regular monthly payments. On top of that on the date of your confirmation hearing the case must be fully funded. If you are behind in funding you can not even get more time to become current. If you are employed, the only way to avoid the need for a pay order is to petition the court for a waiver of this requirement. I have had only one client ever request such a solution. The court granted the request. Guess what? She failed to make the monthly payments. There was always some “emergency.”
Ultimately, the court rescinded its order and required a chapter 13 pay order. Her fears of retaliation from her employer (a big law firm) were unfounded and the pay order caused her no difficulty. The only way to avoid a pay order is for you to ask the court in a motion, but you will need a compelling reason.