Can I change my exemptions now that my trustee payment is being taken from my wages?

[kmccoleman]

So I have a question. Since I got an unpleasant surprise in the form of a wage order from my bankruptcy court to pull money from my paychecks, can I change my exemptions back to what they were before since I'll be bringing home way less with them bleeding me for $300.00 per paycheck?

I originally changed my exemptions because the Trustee required it in order to confirm my plan and to ensure I took out enough taxes. But that was prior to the wage order. I figure it's more than justified to change those exemptions back (I only took one for state and Federal) to cover the payment they are taking away.

Can I do that??

[southernmama]

I can only speak from personal experience but I don’t think you can. Once they started taking our payments from my husbands check, we got a copy of the order and it specifically said that no changes are to be made during the duration of the bankruptcy. We were in the same boat as you so I completely understand. We had more taxes taken out to make sure we didn’t have to pay in as much and then they started taking payments out and we couldn’t change it back.

[justbroke]

If it was a requirement in order to confirm, then you shouldn't change it. They do not want you to owe money to the IRS each year of the plan as that puts the plan in jeopardy. During most of mine, I actually had an IRS letter on file which froze my exemptions.

[kmccoleman]

justbroke the wage order came after the plan and it was based on my income prior to the confirmation. This decreases my take home by $600.00 monthly.

[justbroke]

If your Wage Deduction Order (WDO) is for $300, then yes your income would be reduced because the Trustee is taking the payment before it's disbursed to you. They had this like that in my 2008 Chapter 13 and it was tough, but the payments were always mad because they took the money straight from my employer.

If you can use a income tax calculator, or preview your 2019 tax liability versus withholdings, you may be able to come up with something. However, the Trustee and your attorney don't want you getting into tax trouble while in your active Chapter 13.

[flashoflight]

Go back and re-read your chapter 13 plan document. I'm 99.999% sure there is a section where it states you have to make timely payments of all post-petition taxes to get your discharge along with making all 60 plan payments. So you cannot "borrow" from the post-petition IRS and state withholdings to make up the shortfall. Otherwise, everyone who enters chapter 13 could reduce withholdings/increase exemptions until the paycheck is the same as pre-petition and still get the discharge. This might be a good time to review the plan document in its entirety to make sure you don't do anything that is grounds for denial of the discharge such as missing mortgage payments even though all 60 plan payments were made. Missing taxes or mortgage payments will still lead to the loss of the BK discharge.

[justbroke]

I can only echo what flashoflight has written. This is about staying in plan and not missing any payments post-petition.