Michigan Chapter 13 Payroll Order is a court-ordered payment system used to distribute income from an employer to a debtor’s creditors in a Chapter 13 bankruptcy. The debtor’s employer automatically deducts the amount of money designated by the court each pay period, and deposits it into a special account. This money is then distributed to creditors according to the payment plan outlined in the debtor’s Chapter 13 bankruptcy. There are two types of Michigan Chapter 13 Payroll Orders: Reconfirmation Payroll Deductions and Post-Confirmation Payroll Deductions. Reconfirmation Payroll Deductions are ordered before the debtor’s Chapter 13 bankruptcy is approved by the court and are typically used to pay attorney’s fees, court costs, and other administrative expenses. Post-Confirmation Payroll Deductions are ordered after the debtor’s Chapter 13 bankruptcy has been approved by the court and are used to pay creditors according to the payment plan outlined in the debtor’s Chapter 13 bankruptcy.
Michigan Chapter 13 Payroll Order
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FAQ
PAYROLL DEDUCTION ORDERS This order tells your employer to deduct your plan payment from your paycheck and send it to the Chapter 13 Trustee. This order prohibits your employer from honoring any garnishments while you are under Chapter 13, including back taxes.
A Chapter 13 bankruptcy trustee will usually not closely monitor a person's income during the bankruptcy process, but they have every right to request proof of your income and pay stubs. It's not their responsibility to scrutinize your finances for any wage increases, so you need to report changes in your income.
You must make a regular payment to the Chapter 13 Trustee within 30 days after filing your plan and payments must be for the period of time designated in your plan. Payments can be in the form of a Cashiers Check, Money Order or submitted online via E-Pay.
A Chapter 13 petition for bankruptcy will likely necessitate a $500 to $600 monthly payment, especially for debtors paying at least one automobile through the payment plan. However, since the bankruptcy court will consider a large number of factors, this estimate could vary greatly.
Once the court confirms the plan, the debtor must make the plan succeed. The debtor must make regular payments to the trustee either directly or through payroll deduction, which will require adjustment to living on a fixed budget for a prolonged period.
The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
If your Chapter 13 plan payment is too high, you can sometimes get it lowered if you encounter a reduction in household income. If your income reduces, you are many times also allowed to reduce your plan payment. This is accomplished usually by filing a Motion to Modify your Chapter 13 plan.