A Chapter 13 question

[DYLAN150]

Once a chapter 13 is approved and payments are being made, is there a provision made for the cost of inflation? Such as the rising cost of prescription drugs, gasoline, food, house and car insurance, that's just to name a few. Just wondering?

[justbroke]

Once a chapter 13 is approved and payments are being made, is there a provision made for the cost of inflation?

No, but if your income increases, they generally allow inflationary affects to offset any plan increase. What that means is that if your raise or net income increases by less than 10%, they generally won't change your plan payment.

Contrarily, Your plan payment won't go down if things become cheaper.

Such as the rising cost of prescription drugs, gasoline, food, house and car insurance, that's just to name a few. Just wondering?

You could try to amend your Plan if your basic necessities increase in costs. However, they will still use the IRS allowances as a basis. The IRS allowances do change. They changed 10/1/2008 due to high energy costs. Then energy prices went down, but hey, that's the current allowances for ya!

[chloe0724]

That's why you need a really good attorney that knows how to "pad" you plan. That way you can start a small savings for when things do increase in price, or you have home repairs.

[BnkrptcyLwyr]

You can lower the payments ... but you cannot go below a 0% plan to unsecured creditors.

So, if you have a plan with a dividend to unsecured creditors that is about 50% ... you can do a plan modification that could take you down to 0% if expenses go up, income drops and you would have enough to pay all the secured creditors and priority unsecured creditors. I've done it here in Michigan all the time. It's very, very common.

You should always keep in touch with your attorney when income and expenses go up or down and your payment becomes less affordable.