Chapter 13 payment increase possibility

[busby]

This is just a "what if" type question I'd like to know if anyone has an opinion on.

I understand that when you file for Chapter 13 protection and your case is confirmed - you have usually a 60-month plan with a certain payment amount each month.

However, if during the course of your plan - your income increases and an increased monthly payment is required -

1) this doesn't affect the "stay" because the plan is on-going
2) interest and other fees won't be added on for the time you've already been in the plan by creditors

As long as you make the new payments (and no other problems arise) then you will complete at the end of the 60-months with only an adjusted monthly payment amount?

What I understand (and I'm not the brightest tool in the shed) is at the time of filing, your financial situation came up with your monthly payment amount and other particulars of your plan. When that was confirmed, it's usually a 60-month payback.

But can you, during your payback, make you start to make too much money where you're no longer protected under Chapter 13?

I assume the worse that could happen is that your monthly payments would increase to a theoretical maximum of 100% payback but the life of the bankruptcy would run until completion.

The reason I ask is because I am self-employed and could possibly make more (or less!) than what was used to file and confirm the bankruptcy. I don't mind paying more if my income justifies it - and unless things get really bad - it's not worth the time to amend the plan if my incoming falls.

Filing bankruptcy has cleaned up my finances though - monthly reports are much easier to understand and see where money is really coming and going. With that and renewed dedication to financial responsibility - I am hoping for the best but if the bankruptcy is yanked out from under me - then that would be very bad.

[AngelinaCatHub]

Please, I would only guess, but when you are granted your bk, and you MUST tell your Trustee if wages go up, you may be assessed more. I doubt you would lose your bk status. 'Hub

[Flamingo]

Say for instance you already have a confirmed Chapter 13 Plan with a confirmed monthly payment. Six months later, your income increases several thousand dollars. What happened is now your disposal income that was in place at the time of your filing has now been increased which means that there is more money available for your creditors during the course of your plan. Your Plan would be modified to distribute those additional funds to your creditors. The same would occur if there was a decrease in your disposable income, or an increase/decrease in assets, say from an inheritance.

If you expect your income to rise and fall during your plan many times, it would be something to be discussed with the attorney handling your Chapter 13 plan.

[laurannm]

Your BK won't be yanked from under you, unless to do something that causes the trustee to file a dismissal. You definitely want to consult with your attorney as to what the requirements are as far as reporting increases/decreases in income during your plan. Some trustees require that you report changes in income (either via tax returns or I think some self-employed posters have to submit monthly income/expense statements), others do not have to report anything. Yet others only have to report increases if they are above a certain percentage.

Now if as part of your plan you are required to report increases and you fail to do so (or fail to report an inheritance, lottery winnings, etc) then the trustee could dismiss your plan, which would be very bad.

[lrprn]

Bottom line here is that trustee preferences about being notified if your income increases varies widely around the country. If your Ch 13 trustee did not give you specific instructions in writing or verbally during your 341 about what to do if your income increases, then you need to ask your lawyer what to expect and if it's necessary to notify your trustee or not.

Most trustees that say they want to know about income increases don't do a thing until your income increases at least 10% over what you showed when you filed. Otherwise they would be tied up forever making little adjustments to every filer's payments every month - a total nightmare for the trustee and his/her staff. Your income increase has to provide sufficient extra money to your creditors to be worth their time to file a plan amendment with your bk court.

As far as income decreases go, again the key is how much of a decrease happens and if the decrease is permanent. Your lawyer can tell you what your trustee and court are doing in this circumstance. If the decrease is sufficient and likely to last for a long time, then you and your lawyer can file an amended Ch 13 plan with the court that reflects your reduced income. If your income falls enough, you could then not show any disposable income any longer and could switch your 13 out and file a Ch 7 instead.

Hope this clarifies things a little. You need to talk with your lawyer to find out what to do with income increases and decreases during your Ch 13 with your assigned Ch 13 trustee in your local court.