What if income increases during chapter 13?

[brokenomore]

What if the income level at filing is at a point where little or no payment would go to the unsecured creditors, but a year later, there is a substantial increase?

For example, if at the time of filing there was an icome of $35,000 per year, and bills were just barely being paid, but a year later the income jumps to $75,000.

What happens when the trustee sees the tax return and a substantial increase in income?

Do they want it all?

Is there any way one could save a substantial amount for buying a home while in chapter 13?

[newbie2]

This is what I was told, and it is reiterated each year via a letter from my attorney: Notify your attorney if you have any change in income (decrease or increase).

We were told via our attorney that the trustee does keep track of income via the tax returns, and any large increase will trigger a modification of the plan.

As Chapter 13 bankruptcy is supposed to be a plan in which to pay your unsecured creditors your disposable income over the life of the plan, I am pretty darned sure that a trustee would be interested in modifying a plan if the debtor had such a large increase in their disposable income.

Also talk with your attorney about any increase in expenses. Many times with income increases there are also expense increases.

[DYLAN150]

Would the expection be social secuirty income?

[lrprn]

Would the expection be social secuirty income?

Social security is not included when calculating disposable income.

[lrprn]

What happens when the trustee sees the tax return and a substantial increase in income?

It depends on how much your income has increased. Many trustees use an increase of 10% or more at once as a trigger to see if disposable income has gone up enough to make it worthwhile investigating to see if the confirmed Ch 13 payment can be increased.

Of course, your expenses may have increased proportionately in that time too, so even if your trustee asks the court to amend your plan, your lawyer can counteract the claim with updated expense figures as well.

Do they want it all?

Only if all of it is new disposable income after your Means Test and Schedules are recalculated.

Is there any way one could save a substantial amount for buying a home while in chapter 13?

It would be challenging to save up enough to make a good 10-20% downpayment on a home. However, depending on the area of the country you live in and where the local real estate market and the real estate lenders are when your Ch 13 is successfully discharged, it might be possible with a great plan, no big costly emergencies, and a dedication to save every dime for the entire five years.

[aa06a47]

Unfortunatly, I didn't have to worry about this. I have not had a raise in 3 years.

Follow whatever the trustee tells you / your attorney tells you.