Why Is Chapter 13 Better Than A Wage Garnishment?

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So I filed Chapter 13 and they’re doing a wage order now and I’m not making as much money as I was before because some of it’s going to the trustee, but why is this better than a wage garnishment?

Outside of bankruptcy if a creditor sues you and gets a judgement and starts garnishing your wages they’re going to take 25 percent of the net. The net is that amount that remains after withholdings for taxes or a domestic support obligation. In Chapter 13 you can list all of your income and all of your expenses and you get to deduct all of your normal expenses; your mortgage, your car payment, your insurance, your food, your utilities, those normal maintenance payments and then the trustee gets the rest.

If the rest is less than that 25 percent that you’d been paying over to a garnishing creditor you’re doing better in Chapter 13. Of course, another benefit of Chapter 13 is that at the end of your planned payment period, whether it’s 36 months or up to 60 months, you’re discharged of the debt. You’re discharged of all of your general unsecured debt. When you’re paying a wage garnishing creditor sometimes it takes longer because interest is accruing at the normal state judgement rate.

In Maryland that’s 10 percent and if you have other creditors they’re going to start garnishing after the first creditor is done; so generally speaking if you’ve got a wage garnishment or a Chapter 13 choice you’re going to be better off choosing Chapter 13.

Thoughts from a Maryland Bankruptcy Lawyer

Ronald J. Drescher
Drescher & Associates, P.A
4 Reservoir Circle
Suite 107
Baltimore, MD 21208
(410) 484-9000
Fax (410) 484-8120
Rondrescher@Drescherlaw.com
http://www.Drescherlaw.com

FaceTime rondrescher@mac.com
Skype ron.drescher

Practicing in Maryland, Delaware, Virginia, Pennsylvania

Can Unsecured Debt Be Garnished, Why Is Chapter 13 Better Than A Wage Garnishment?.

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