Hypothetical question regarding income

[Granny]

If one were to have a substantial increase in income, how long before one has to report it to the trustee?

[treehugger1]

What is the source of the income? Is it expected to remain increased? Is it a short-term increase? I would think that you would have a least six months, since income is based on a six-month average. I wouldn't want to report an increase in income, at least from wages, retirement, etc, unless it was long term. My understanding is that the Trustee sees your tax returns on an annual basis and that is where any substantial increase would show up. Once again, I suppose this varies from district to district.

[Granny]

Long term, permanent, as in the stay at home grandma decides to go back to work. This would then change the whole BK picture. Put the family at 100% payback for less than 36 months.

What I am considering is...would this give us a chance to build a few thousand into savings for emergencies, maybe get the central AC fixed before we have to turn over the additional income.

[lrprn]

Long term, permanent, as in the stay at home grandma decides to go back to work. This would then change the whole BK picture. Put the family at 100% payback for less than 36 months.

What I am considering is...would this give us a chance to build a few thousand into savings for emergencies, maybe get the central AC fixed before we have to turn over the additional income.

Since Ch 13 trustees vary widely on how they handle increases in income, this is a good question to ask your lawyer who is familiar with what trustees expect in your area.

Our Ch 13 trustee expects to be told immediately about any increase in income, permanent or otherwise. He gave us that expectation in writing with "any" underlined and in bold. No doubts at all about what he expects in our case!

[Granny]

I can see having to report it immediately, so that brings up another question. Since the extra income would pay everyone 100% in less than 36 months, would the trustee require all the income to pay it off in the shortest amount of time possible or only the amount required to pay it off in 36 months?

I realize once again, this would probably depend on the trustee and the area, so what's your best guess?

[lrprn]

I realize once again, this would probably depend on the trustee and the area, so what's your best guess?

My best guess is that your trustee will expect you to pay the monthly amount stated in your plan until all your preferred and non-secured creditors that filed a claim are paid in full or the full number of plan months is reached....whichever comes first. But it's just a guess.