Is anyone else tired of

[aces67]

being broke all the time?? We are only 18 months into a 60 month plan and we are so tired of being so broke all the time. Dh has been offered another job making almost double what he currently makes. If he takes it what's the worst that will happen as far as our bk goes? Right now we are at a payback of eight something percent so the worst that can happen is we just pay an extra couple of thousand to pay it back at 100% right?

Thanks!

Amanda

[Flamingo]

If your hubby's income rises, that increases your disposable income. You would need to notify your attorney about the increase and he/she will advise you what will need to be done.

[justbroke]

Depending on what your current plan pays unsecured creditors, the increase in income will have a likewise increase in plan payments and disbursements to unsecured creditors.

Let's say, for example, that you're paying 0% to unsecured creditors and you owe $60K to unsecured creditors and you have four years left of your plan. You currently have $30K in income. Your income doubles to $60K. Guess what, you'll now have to pay $15K a year into the plan (or $1,250 more each month).

That's because you now can pay 100% to the creditors, because your "expenses" didn't increase, only your "disposable income" increased!

That will basically net you about $625 more to your pocket (after they take their $1,250 to pay 100% to unsecured creditors plus taxes -- estimated at a 25% tax rate).

Yeah, a $30K increase in salary gets you only $625 more a month to your pocket. That's just the way it goes. however, $625 a month can be a lot of money when you're in a Chapter 13 Plan.

[woeisme]

I don't know if it is as bleak as that. I remember when I was filing out my schedules that the IRS allowables for spending in different categories was income dependent. For example, the amount you could claim for household expenses varied both on the number of people in the house as well as based on the income. So someone making more money can claim more in some expenses, weird as that sounds. (at least it seemed unfair to me, but maybe they figure the person with the 6 figure income needs to get haircuts at a salon instead of Walmart?) but anyhow, maybe you get to totally re-do the schedules when a change like that happens, not sure, but possibility of being allowed to have more exemptions, thus less disposable income for the trustee?

[aces67]

I sort of follow what you're saying. I guess I should just call my lawyer and ask. The debts we filed only totalled 15,500 to begin with (don't ask). Between monthly payments and the tax refund that the trustee took by the time we reach our 60 months we will have paid in 13K. That's why I'm assuming if our income goes up substantially we'll only have to pay the extra 2500 right?

I normally did with our lawyer's paralegal but she left and now it's impossible to get anyone on the phone there.

[woeisme]

If you go to 100% payback, then your plan will either end early once it is paid back fully, or the payments will only go up a little bit, but either way it sounds like it'll definitely be a good thing if your husband gets a higher paying job. Good luck!

[justbroke]

I don't know if it is as bleak as that. I remember when I was filing out my schedules that the IRS allowables for spending in different categories was income dependent. For example, the amount you could claim for household expenses varied both on the number of people in the house as well as based on the income. So someone making more money can claim more in some expenses, weird as that sounds.

I believe that prior to 2005, it used to be like that. However, it changed after the passing of BACPA 2005. Congress wanted to level out the playing field and keep people from Abusing the system.

Personally, I wish it was still income driven. Having wrote that, I can see why Congress decided to remove the income-driven calculations.