Payroll control is an important concept and something that I require as a Coal City bankruptcy attorney. With regard to a Chapter 13, if you are working, you are going to be required to go on payroll control. Payroll control is an order signed by the bankruptcy judge whereby your employer must deduct a certain dollar amount, which is the trustee payment per month, out of your pay. Many of my clients do not want to go on payroll control because they feel it’s intrusive and they don’t want their employer to know. However, I mandate that payroll control be done whenever you are working for an employer and I’m your Chapter 13 bankruptcy lawyer. Studies have found that payroll control highly increases the likelihood of success in a Chapter 13 bankruptcy case.
And it just makes sense that if the money for the trustee is coming out of your pay; you are not going to have the ability to misappropriate it. As long as you stay working, you are going to have success under Chapter 13 as far as the Chapter 13 trustee payment goes. The other problem, though, is that you are going to have to make your regular post-petition mortgage payments and your other monthly obligations out of what is left out of your check each month. So although your bankruptcy Chapter 13 trustee payment is being sent off and I know your Chapter 13 case is working fine, I don’t have any control over your ability to make your regular mortgage payment and your regular expenses.
Now, if you fall behind on your post-petition mortgage payment, the mortgage company is going to bring a motion to modify the automatic stay. A motion to modify the automatic stay is a special motion that is filed with the Clerk of the U.S. Bankruptcy Court, and it is set out on notice before a judge on a particular date and at a particular time. This is an ordinary type of motion within the bankruptcy process.
My office will also send you a letter letting you know that we have received a copy of the motion to modify the automatic stay, and we try to explain to you what it’s all about, what your remedies are, what your options are, and what we can do for you. On that first court date, if you have the money to cure the default, then the motion will be withdrawn, will typically enter into a default repayment order whereby if you fall behind in the future, the creditor can send you a notice to cure the default, and if you don’t do so within 14 days, the stay is automatically modified without the creditor having to go back into court. Typically on that first motion to modify stay court date, the debtor will come up with a portion of what they fell behind. If the debtor can come up with a portion, then typically the creditor will agree to put the motion over for another period of two to four weeks to see if the debtor has the ability to cure the default. Sometimes the debtor comes to court and has no money to pay towards the post-petition mortgage arrearage, and the motion to modify the stay is granted.
If the stay is modified and the case ultimately gets dismissed, the debtor may have the option to file bankruptcy a second time.