Bi-weekly does not equal semi-monthly: Why the difference matters so much

By Peter Bricks , a Cumming, Georgia bankruptcy attorney.

I recently was replaced another attorney in the middle of a Chapter 13 bankruptcy case in the Northern District of Georgia. My new client mentioned that she had trouble making the plan payments of her confirmed Chapter 13 plan, which were $560 per month.

This client had employer deduction order for her monthly trustee payments. This means the payments were essentially garnished out of her paycheck and mailed to her bankruptcy trustee, which is fairly typical of Chapter 13 plans.

After reviewing the deduction order, I noticed something odd. The deduction order called for the debtor to pay $280 per paycheck. Why was this wrong? The debtor’s employer pays her bi-weekly and not semi-monthly.

While debtors often use the term interchangeably, they mean vastly different things. Someone paid bi-weekly gets paid 13 times over 6 months (26 times in a year), whereas someone paid semi-monthly only gets paid 12 times over 6 months (24 times a year).

In reviewing the debtor’s account ledger, I realized the debtor had overpaid her trustee payments by over $1,000, because this mistake had been going on for over a year.

A similar problem I face is when reviewing people’s monthly budgets, they often tell me what they spend weekly and then multiply that amount by four to get a monthly figure. This is also incorrect, because there are 4.33 weeks in a month.

Math mistakes like this can lead to all sorts of problems, particularly incorrect figures on a means test. Additionally, it can cause great interference with a Chapter 13 trustee payment, because the debtor is going to struggle to make payments if the figures he is using are incorrect.

Peter Bricks is a member of the National Association of Consumer Bankruptcy Attorneys. He has bankruptcy attorney offices in Atlanta, Woodstock, Dunwoody, Cumming and Jonesboro, Georgia.

Minors Filing Bankruptcy

While is is very unusual, it possible for people under 18 to file bankruptcy. Why would a minor, who is not normally liable for debts, need to file bankruptcy?

Imagine this scenario. Father of child owns a house with a mortgage. Father dies, thus the child would inherit the house. Problem is, no one is paying the mortgage, so the lender wants to foreclose. Child is expecting life insurance proceeds from deceased father, but the foreclosure will happen before the insurance is paid. If nothing is done, child will lose the father’s house.

This is the situation that faced Shawn Powell, 10 years old, and his attorney Brett Weiss. To resolve the problem, the attorney filed a Chapter 13 Bankruptcy for Shawn, staying the foreclosure. The bankruptcy proceeding stayed the foreclosure long enough for the life insurance to come in and pay the mortgage. Read Shawn Powell’s story.