What factors are excluded when determining the disposable income or income deduction order?

An income deduction order entails the employer of the borrower to subtract the Chapter 13 payment plan – a written arrangement of how debts should be paid – every pay day. In most cases, the Chapter 13 plan should propose that debts are paid via income deduction. That is, the plan must distribute all of the borrower's disposable income for payment to his/her creditors except if all unsecured creditors will be fully paid.

Orders for income deduction are not like garnishment orders which are subject to CCPA – an act which says that only twenty five percent of disposable income must be deducted from a debtor's paycheck. Also, a debtor who owns little property, with low income, and with secondary sources of income like US pensions, may avail some wage garnishment exemptions.

A borrower must submit a copy of his income and assets in order to decide the Chapter 13 payment plan amount. Under the Bankruptcy Code, exemptions from the computation of the debtor's disposable income contain his Social Security income, payments on child support, foster care and disability, and domestic support. Repayment of pension contributions and loans are also exempted. However, if a debtor is a retired employee or is self-employed, he isn't required of an income deduction. But, he can do a Chapter 13 payment plans every month.

So once you receive a garnishment notice, contact a debt settlement attorney who can surely help in fixing the terms of payment of your debts.