If you are considering bankruptcy, you may wonder whether bankruptcy payments come out of your paycheck, or if you can make them on your own accord after you get paid. The answer depends largely on the chapter you file and how you handle payments in your case.
At Werner, Hoffman, Greig & Garcia, we help you understand what filing may mean for your income before you move forward. A seasoned bankruptcy attorney will review your situation and explain whether payroll deductions may apply.
When Chapter 13 Can Affect Your Paycheck
Chapter 13 bankruptcy uses a court-approved repayment plan. You make regular payments to a Chapter 13 trustee, who distributes money according to the plan. Florida law allows a court to order an employer or another source of income to pay part of your earnings to the trustee under 11 U.S.C. § 1325(c).
In some cases, your employer deducts bankruptcy plan payments from wages before the rest of your salary reaches you. The U.S. courts explain that you may make Chapter 13 payments directly or through payroll deduction. A payroll deduction can help keep your required payments on schedule throughout the plan.
Are Chapter 7 Payments Taken From Wages?
Chapter 7 works differently because it does not use the repayment plan required in Chapter 13. Instead, a trustee administers nonexempt property that becomes part of the bankruptcy estate. Under 11 U.S.C. § 541(a)(6), the estate generally excludes earnings from services you perform after filing.
That means recurring bankruptcy payments generally do not come out of your wages in a standard Chapter 7 case. Other paycheck deductions may still apply for reasons unrelated to the bankruptcy filing.
What if Income Changes During Chapter 13?
A Chapter 13 plan can last 3 to 5 years, so changes in income can affect your ability to make required bankruptcy payments. If your financial circumstances change, do not assume that you can simply stop paying the trustee.
Florida law allows the court to modify a confirmed Chapter 13 plan in certain circumstances. Werner, Hoffman, Greig & Garcia may review the change and explain what options may be available based on your case.
Contact Werner, Hoffman, Greig & Garcia About Bankruptcy Payments and Your Paycheck
Bankruptcy should give you a structured process, not uncertainty about your income. If you are wondering whether bankruptcy payments come out of your paycheck, Werner, Hoffman, Greig & Garcia can explain how Chapter 7 or Chapter 13 may affect your wages and whether payroll deductions may apply.
We offer a free initial consultation. Speak with our bankruptcy team to get unique legal insight and understand your options before you file.
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About the Author
Adam Werner is a partner and practicing attorney at WHG. He specializes in personal injury cases, workers’ compensation claims, and veteran disability benefits. He routinely writes about personal injury and workers comp topics for the Werner, Hoffman, Greig & Garcia blog.
