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Can Trustees garnish bonuses in a chapter 13 bankruptcy case?

Austin, TX |

I recently filed chapter 13 bankruptcy and was just informed that my yearly bonus will be garnished. Is this correct? Will all bonuses and stipends be garnished? If I get a part-time job, will these wages be garnished as well? Will these garnishments be applied to my Plan total?

Attorney Answers 3

  1. Yes, when your plan information is sent to your employer they are instructed to provide the trustee any bonuses and extra money you recieve from the company. In addition, if your income level changes, your attorney must report this increase to the trustee so they can determine if your plan payment will change (i.e. adding another job or salary increase)

  2. Yes and they do this alot if bonuses are normal. They will either take directly from employer or you will be required to turn it in to the trustee. Stipends the same thing. Part-time job will have to be reported if changed your income 10%. This will raise your plan pmt. Talk to your BK attorney.

  3. These answers are not true everywhere. If the bonus is a normal part of your income, it must be included as income in your plan and the wage assignment will apply. If you get a part time job or your income unexpectedly increases, the trustee can require that your payments increase under section 1329. Some jurisdictions require that you notify the trustee of changes in income; others do not.

    The answer to your question is specific to your jurisdiction and should be addressed by your attorney.

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    [This communication is intended as general information and not specific legal advice, and this communication does not create an attorney-client relationship.]

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