new job under Chapt 13

[tofu4you2]

My husband may be getting a new job before or after we file Chapt 13. It is a large increase in salary. It may be a $50k or $60k increase. How will that effect the 13? Will they have to adjust and take more disposable income leaving us with about the same either way. Will we be able to go from a 5 year to a 3 year if he takes this job after we file. So many questions...sorry.
Thanks in advance.

[woeisme]

Yes, if your husband gets a big pay raise fromhis new job, it needs to be reported to the trustee, and they will adjust your monthly payments. It's weird, but I remember from doing the forms that some of the IRS tables of allowable expenses depended on income (people who made more money were allowed to claim higher expenses for groceries, utilities, etc I think) so you may come out a little better with the raise, but still in theory all of your "disposable" income will go into the plan.

If the raise allows you to pay your plan in full at 100% payback to creditors in 3 years instead of 5, that is fantastic! Just a warning, you will need to do a 100% payback to get out of the plan early at year 3 though. Let's say your original plan is 50% payback on $60,000 over the course of 5 years by paying $500 per month. If you get a big raise and can now afford twice as much, $1000 a month of disposable income, you don't get out early, you just move to 100% payback of the $60,000 over the 60 months. Now if you are already near 100% payback, then the raise will allow you to finish the plan sooner, which I hope is the case for you. Good luck on hubby's job!

[lrprn]

woeisme makes good points.

The key here is that until your husband actually starts the new job on day one, he doesn't have a new job yet - just the possibility of one. If you file Ch 13 and by the 341 meeting your husband still hasn't started the new job, if the trustee asks if your income has changed since filing, you can honestly say no.

If you haven't told your lawyer yet about this potential large increase in income, do so right away. Find out exactly under what circumstances you are required to report the new income increase to your trustee. There's a lot of variability in how Ch 13 trustees handle increases in income after filing, so make sure you understand exactly what to expect with yours.

Hope everything works out just as you two hope it will!

[kmb]

My husband recently got a new job and when we called our attorney to ask if what we need to do, he told us we are not required to report it to the Trustee, that the only information they ask for is change of address if you move. We don't have to send tax returns in either. He told us to enjoy the bump in pay which is also about $10K, so that's exactly what we're going to do! Granted, we filed about 10 months ago so aren't involved in any active proceedings, but I'm glad to hear our payback isn't going up because of his higher income.