When does the payroll garnishment end?

[memuzz]

I have been monitoring my case on the national data center. According to the claim record my case claims are entirely paid off. I am also still paying into the case at the present time. I probably have close to $500 left that should be refunded to me.

I notified my attorney on Monday, July 16 about the case. We have filed our post bankruptcy credit counseling certificate with my attorney. My attorney said that she would be calling the trustee's auditor about the case since our payment were quite high. We paid around $1200 a month for over 60 months. We didn't have any real property only our car which is on a bank lien. We are renting also. The debt was from when my husband was unemployed for over 18 months prior to our marriage.

My husband pays $253 a week into the case. I know that it's up to the trustee to close out the case. My main concern is that the garnishment should be stopped, but when? It would be nice to have the extra money to get some needed repairs to our car and to start saving again.

Thanks for any help.

[justbroke]

I don't know the procedure for Ohio, but in Florida, it's the attorney that files a Motion to Vacate Wage Deduction Order... which stops the wage order. (It's actually, and technically, not a garnishment.)

I think your attorney is calling to make sure that your the Trustee is willing to close your case. Here's an example of where it may not be closed even though you paid the so-called plan "base". The plan base is just a calculation made based on your DMI at the time of confirmation. If you were required to turnover any income tax "refund", then the plan base may not change, but how much you pay into the plan may be MORE than the plan base! So, if your plan base was $60,000 (say $1,000/month of DMI over 60 months, and you had 3 refunds of $2,000 each, then your plan base is technically $66,000. The extra from the refunds are just that... extra. (I am not talking about 100% plans where it works slightly differently.)

So, wait for your attorney to see what's going on at the Trustee's office and if the Trustee believes that you are done.

To put it more simply, reaching the plan base does not always mean that you are done.

[MSbklawyer]

I concur with JB's analysis. In Mississippi, however, the trustee sends a "Release of Wages" which acts as a cancellation of the wage order.

[memuzz]

My base plan is at 55% with no tax refund. We actually owed money to the IRS every year that we were in our case. The only money that funded our plan was my husband's paycheck. I was working when we first started our case back in 2006. We almost were able to file a chapter 7 bankruptcy case. I attempted to contact my first attorney to stop the chapter 13 because I had to quit my job at the time. I was working as a nurse aide and hurt my back seriously. My doctor recommended that I stop working for my back to heal. The plan was confirmed before we could convert the case. Also, my husband got a promotion which put our income above the means test standard for us. We would have ended up in a 13 anyhow. We were paying 80% base plan, but my new attorney got the base plan lowered to 55%. So what we had listed on our claims is what was to be paid off. According to my calculations that case is paid off. After this week's payment we will have over $1200 owed to us from the court.

I am grateful for the information to the people who replied. Thank you.

[spidge]

...and you had 3 refunds of $2,000 each, then your plan base is technically $66,000. The extra from the refunds are just that... extra. (I am not talking about 100% plans where it works slightly differently.)

So, wait for your attorney to see what's going on at the Trustee's office and if the Trustee believes that you are done.

To put it more simply, reaching the plan base does not always mean that you are done.

I know this is a bit off topic, but you triggered a thought JB. If in the review/audit at the end of the BK13 they see that the debtor sent all his tax refunds would he be refunded the difference for the years he/she paid? So lets say I paid the state this last year but was refunded an amount from the feds, should I see the difference come back to me? My plan base amount did increase the amount of the tax refund this last year, so I am thinking next year I will send a note off to my attorney to be sure the trustee would be good with the difference in refund minus the paid balance in the same year.

[justbroke]

I know this is a bit off topic, but you triggered a thought JB. If in the review/audit at the end of the BK13 they see that the debtor sent all his tax refunds would he be refunded the difference for the years he/she paid? So lets say I paid the state this last year but was refunded an amount from the feds, should I see the difference come back to me? My plan base amount did increase the amount of the tax refund this last year, so I am thinking next year I will send a note off to my attorney to be sure the trustee would be good with the difference in refund minus the paid balance in the same year.

This is precisely the issue that I didn't want to get into detail in my first response. This is where the plan base is "met" because interim tax refunds were applied. However, as you have seen in your case, the Trustee just raises the plan base to include the "unanticipated" refund!

Some attorneys may tell you to modify your tax withholdings so that you don't have a refund coming. Otherwise, many plans require the turnover of any refund and, unfortunately, it doesn't mean that you pay off your Chapter 13 Plan any earlier. (Prior to the bankruptcy amendments in 2005 you could actually payoff the plan base early and be done! But the BAPCPA changes in 2005 have removed that ability.)

I don't think you'll like the answer that your attorney gives you. The refund is considered as nothing more than "extra" DMI.

[indy4wins]

Hi All:

I'm new here, and I appreciate all of the wonderful information; My situation is a little different than Memuzz's situation, but somewhat the same; I was in a 100 percent plan payback for about 2+ years and when I got divorced, the plan was successfully modified and now I'm in a non-100 percent plan; No where does my original or udpated approved plan state anything about tax refunds; I can't remember the last time I got a refund; I'm an renter and don't have anything to write off, and I've owed every year of my plan, state and federal since 2007; I'm in month 57 of my plan, soon to be 58, and the "plan base" will be satisfed on Aug 3rd, the end of month 58; I've confirmed with the trustee that my plan's maturity date is 10/3, approximately 2 months after my last payment on the "plan-base"; I asked them about stopping my wage order, but they told me that I needed to stay in my plan for an applicable 60 months; I asked them what would happen to the funds paid to them over and above the "plan base", for approximately 2 months, and their answer was I would get a check for any overage; I am going to take the advice of a lot of people on here, and contact my attorney at the beginning of September to start the process to "Motion of Wage Order Dismissed"; That way I'll have some time to work with him in case there are any issues; Does this sound right at all; Thanks

[justbroke]

Whether you will receive a refund for anything over the "plan base" is up to the Trustee when they do their audit. I can't tell you that you'll receive a refund of that amount since many Trustees just apply that to the plan base (increase the plan base).

Congratulations on almost being done!

[indy4wins]

Yeah, I guess we'll have to see how it goes; The reason why this happened is because my wage order took about 2 months to re-do because of the plan modification; Anyway, I'm glad it's almost over, check or no check; Thanks for the comment; I certainly wish everyone on this site, past, present, and future, a lot of success and please never give up!