Effect of Wage Increase on Chapter 13 Plan?

[moneyprob]

I'm a newbie, and am hoping to qualify for a Chapter 7, but I'm rather close to failing the means test (sections 2 and 3) in Chapter 7. My actual disposable income, though, is very near zero. As a result, I want to know what I'm up against if I'm forced into a Chapter 13.

My primary concern right now: I'm likely to get some wage increases and my wife is likely to start working over the next 12 - 24 months.

Are these income increases likely to prompt an increase in a Chapter 13 plan? If so, I REALLY need to get into a Chapter 7.

[rrockinggramma]

a chapter 7 or a chapter 13 is based on income information at the time of filing, not projections of what may or may not be. If you haven't gotten increases and your wife isn't working, then file prior to those events occurring to keep you out of a chapter 13.

[lrprn]

a chapter 7 or a chapter 13 is based on income information at the time of filing, not projections of what may or may not be.

Unfortunately, Ch 13 case law decisions since 2005 have made future income a part of the Ch 13 game in some of the bankruptcy districts across the US.

Many Ch 13 trustees will instruct their filers in writing as a part of their plan that they must report income increases after filing (how much of an increase must be reported is determined by the individual trustee). Although it's unusual, if the new income increase is above 10% of what was reported at filing and expenses do not increase proportionately with the new income, it is possible that the trustee can go back to the court and request the additional disposable income be added to the Ch 13 payment.

Frankly this doesn't happen very often, but it is a possibility.

This Bankruptcy Law Network blog post from April 2008 does a good job explaining what may happen if income increases after filing a Ch 13 - http://www.************************/...ptcy-petition/

If you haven't gotten increases and your wife isn't working, then file prior to those events occurring to keep you out of a chapter 13.

Yes, I agree with RG - if you qualify, file Ch 7 now so your income will be at its lowest. If you are close to the median now, extra gross income added into the Means Test and Schedules won't help at all.

[banca rotta]

I'm a newbie, and am hoping to qualify for a Chapter 7, but I'm rather close to failing the means test (sections 2 and 3) in Chapter 7. My actual disposable income, though, is very near zero. As a result, I want to know what I'm up against if I'm forced into a Chapter 13.

My primary concern right now: I'm likely to get some wage increases and my wife is likely to start working over the next 12 - 24 months.

Are these income increases likely to prompt an increase in a Chapter 13 plan? If so, I REALLY need to get into a Chapter 7.

Are you certain you listed "all of your legally allowed expenses" on form B22? Hmmmm?

Do you have a decent life insurance policy to protect your loved ones? Do you have a good auto insurance policy with a low deductable to protect your wallet? How about home owners and renters insurance? Is there a plan better then the one you have to protect you and your property?

Look into this and then see how close you are on the means test. Also if you decide to "buy extra protection" make sure you have a history of making these higher monthly payments and not a couple of weeks before filing either.

Good luck.

[banca rotta]

it is possible that the trustee can go back to the court and request the additional disposable income be added to the Ch 13 payment.

Frankly this doesn't happen very often, but it is a possibility.

Personally that should be illegal but not in this lifetime. Once a plan is confirmed it should be rock solid unless the debtor wins the lottery.

[muzzey58]

You should only be concerned about the last 6 months of income from you. Do not report any expected wage increases at the moment because they are not relevant for the time at filing. Chapter 7 is based on the median state income level. There are various factors besides incomes. The first being how many people do you support. Household count or dependents on your income. Basically, they calculate the qualifications the same as the IRS. How many dependents you have and your income. Say if you have 3 people living in your household, then your income would qualify as a couple or two people would have to file a chapter 13 because they exceed the state median or middle level. My husband and I filed in 2006 and I was working. I quit working because of a back injury from a prior job in 2006 when I worked as a nursing assistant. We might have qualified for a 7 but the lawyer who filed our case messed it up badly. He included my husband's pay from January through June. It should have only been June through November when we filed. He had my husband's higher tax level of single also calculated into our payments. The whole filing was a mess until I hired another lawyer and she eliminated my income and lowered the tax liability because of being married. As I mentioned you only are responsible for the last 6 months of your income not projected income. I hope you're able to file a 7, chapter 13 is a headache and a half and we still have 15 months left. Best wishes.