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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 89698
Experience:  Attorney At Law handling education matters.
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I have a question about earned but unpaid wages in a Chapter

Resolved Question:

I have a question about earned but unpaid wages in a Chapter 7 bankruptcy.

Almost every W-2 debtor will have some earned, but unpaid wages.
For example, suppose the debtor has a $2,000 paycheck coming on the 10th of the month, but he filed bankruptcy on the 3rd of the month. In Utah, the debtor's wages are exempt up to 75% of that amount. Theoretically, would the debtor have to list the $2,000 on schedule B and claim an exemption of $1,500 on Schedule C? Would the trustee then be able to seize the remaining $500 as an asset of the BK estate?
Submitted: 10 months ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 10 months ago.

cfortunato :

HiCustomer

Customer:

hello

cfortunato :

It is true that most Bankruptcy filers will have some earned, yet unpaid, wages at the time of their Bankruptcy filing. Yet, those unpaid wages do not have to be reported unless the filer has completed a pay period.

Customer:

good to know. is there a BK statute or court ruling concerning this matter?

cfortunato :

For instance, if a filer's pay period is Monday - Friday, and files on the Wednesday in between those days, he would not have to report his unpaid wages.

cfortunato :

There is no statute that addresses this, and I am sorry, but I am not aware of any case law. (It is something I learned from other Bankruptcy attorneys in the beginning of my Bankruptcy Law practice.) I will therefore opt out of this question, so that someone else can help you further.

Expert:  Law Educator, Esq. replied 10 months ago.
Thank you for your question. Your previous expert has opted out and I am a different contributor who looks forward to working with you to provide you the information you are seeking for educational purposes only.

Wages earned after the date of filing bankruptcy and not yet paid are exempt. Furthermore, any exemption for earned but
unpaid wages stems from 15 U.S.C. § 1673(a) which states:

“The maximum part of the aggregate disposable earnings of an
individual for any work week which is subjected to
garnishment may not exceed (1) 25 per centum of his
disposable earnings for that week, or (2) the amount by
which his disposable earnings for that week exceed thirty
times the Federal minimum hourly wage . . . in effect at the
time the earnings are payable, whichever is less . . . .


Thus, this is not a simple matter for sure and you need to present your documentation to your bankruptcy attorney to make a proper determination, but generally your earned but unpaid wages are usually going to be exempt in most cases.




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Law Educator, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 89698
Experience: Attorney At Law handling education matters.
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