Chapter 13 Wage Order Directives
The primary complaint of Chapter 13 debtors under wage order is the fact that wage order directives are not activated quickly enough to keep them current with the Trustee when payment increases. In the case of payment increase due to plan modification, the debtor is responsible to send in any amounts due above the current wage order amount until the Trustee sends amended wage order directive to employer. The issue is that some of these wage directives are being sent immediately and others not being sent to the employer until after the Plan Modification hearing date. This causes issues with current status of debtors plan if they don’t send additional funds to remain current. Many debtors rely on the Wage order to keep them current under any circumstances.
In one particular case, the debtor was switching employers in the midst of plan modification to lower the plan payment significantly. The Trustee’s office can not terminate the Wage order. The wage order can only be terminated by the employer after debtor is no longer employee. In this case, the decreased wage order was not recognized at the Trustee’s office until a new wage order was provided by debtor for new employer. This process takes about 2-3 payroll cycles and is sometimes not started until after the plan modification hearing. So this Chapter 13 debtor went from being overpaid with Trustee’s office in November 2006 to delinquent in January 2007. Obviously, this has causes the Chapter 13 debtor to become concerned that he suddenly owes almost a $1K to be current under new plan payment schedule.
This issue arises under Chapter 13 new law reform case when several payment changes are made the payment scheme of Chapter 13 plan.
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