How will a new job paying a lot more money affect Chpt 13?

[kbates1208]

I did a search and I didn't find what I'm asking. I hope its not a repost...I'm new to the site. My husband and I filed Chpt 13 back in April. He is now being offered a job overseas that will pay quite a bit more than what he's making now. We want to know what happens if he takes the job. Will our bankruptcy be amended, or will it be dismissed and go back to us paying everything again? I'm in Texas and we were told we couldn't include our house in the plan. Its made it extremely hard to afford. So the primary reason for taking the job is to pay off the house. The lawyer is hard to get in touch with or I'd ask him, by the way. Thanks for your help!

[justbroke]

Once you actually have the job and have started working, contact your Attorney and discuss this. In most Districts you are required to report any change in employment. Generally speaking, Trustees usually don't care about small increases in pay (cost of living... to about 10%). This is because there is something called inflation and they surely don't want to worry about this for every case each year.

If your increase is greater than 10%, you may need to contribute more to your Plan. Your lawyer would help determine what that might be. With the greater income, you may have also increased expense in some areas that are allowed.

Now, reading into your post some more, it sounds as though you have a home that you kept in the Chapter 13. (Just for the sake of clarity... your home is always "included" in the bankruptcy. Whether you surrender or retain the property in a Chapter 13, determines if you continue making payments as a secured debt.) It reads as though you wanted to keep the home and live in it, but your Chapter 13 plan payments are really tight. Again, I'd work with your attorney to figure out the correct way to amend your plan, if that's required.

So what are your intentions with the property and with the new job? Are you both going overwseas? Do you now want to abandon the home and surrender it?

[kbates1208]

No, we are not both going overseas. I will be staying in our home with our kids. What I meant, and perhaps didn't say well is that we have a plan payment, and the house payment. When we first began the bankruptcy, we thought the house would be included in plan, but found out it couldn't be. However, we had already determined that we'd need to do the bankruptcy, so we proceeded. Now we are having trouble affording both payments. So husband going overseas is going to allow us to pay off the house and other bills that weren't included in the plan.

[justbroke]

No, we are not both going overseas. I will be staying in our home with our kids. What I meant, and perhaps didn't say well is that we have a plan payment, and the house payment. When we first began the bankruptcy, we thought the house would be included in plan, but found out it couldn't be. However, we had already determined that we'd need to do the bankruptcy, so we proceeded. Now we are having trouble affording both payments. So husband going overseas is going to allow us to pay off the house and other bills that weren't included in the plan.

If your Plan doesn't account for housing, then there is something wrong with the Plan. There are two types of debt in a Chapter 13 Reorganization... those paid inside the plan and those paid outside. The plan must still account for things outside the plan. This is accomplished by the Means Test (Form B22C) and Schedule I/J.

If your Plan of Reorganization (inside/outside payments) never included the house payment at all, something is wrong.

It's a fact that many people pay their homes and cars outside the "Plan". This is when you're current on those debts. In some Districts it's mandatory to pay everything inside the plan (through the Trustee).

[kbates1208]

I don't know what is being miscommunicated here- the Chapter 13 plan does account for the house payment. What I am trying to say is that after the two payments: the plan payment and the house payment, we are still broke. Our finances have decreased due to decrease in work hours. When we first started on the bankruptcy, we were under the impression that our house would be included as part of the plan payment. Its not. Its made outside the plan. I was explaining this so it would be understood why my husband wants to go overseas to make more money. At filing, he brought home apprx $2200 a month. Now that work hours are decreased, his take home pay is apprx $1800. Now, if he gets the overseas job, he could get apprx $8000 a month. So my question is would our bankruptcy be dismissed if he makes too much money or will the plan payment just be adjusted?

[justbroke]

What I am trying to say is that after the two payments: the plan payment and the house payment, we are still broke. Our finances have decreased due to decrease in work hours.

Aha! That's what's missing! When this occurred, I hope that you immediately informed your attorney and stayed on top of that. Chapter 13 is not meant to punish anyone. It's purpose is to allow you reasonable living expenses such that your lifestyle is not at the expense of your creditors. That's it!

So my question is would our bankruptcy be dismissed if he makes too much money or will the plan payment just be adjusted?

No, it won't be dismissed. Your lawyer and you should have had your plan modified when you were havingh difficulty with a reduction in pay.

If you haven't done so, you should immediately get with your attorney and inform them that you have a reduction in income. They can work out reductions and/or suspension of plan payments (based on your personal income/expense/plan factors). Do this today. There's no need to work on or have the lawyer think about your future possible overseas job. You need o fix the problem you have today, today!

[kbates1208]

Thanks! I knew I was somehow not typing what I was intending to say! LOL