Ten Percent Increase Income Rule

[Billssuck]

Does anyone know where this is written with a clear explanation? Reason: husband lost his job and just recently took a job making about $1,000 less per month and we just modified our CH13 to surrender our house. During our session with our lawyer to do this, I asked do I report an increase of income above 10 percent of my old amount of income when I filed our do I look at our new lower income after we modified? He looked at me and not so sure sounding, said "the new lower income". Well...low and behold...it is now a very real possibility that I will be going from part-time/call-in status to full time in the next few weeks and my income could take us back up where we were with my husband's previous job. I know, I can't do anything until it happens, but I'm always a forward looking person. Any advice is appreciated!

[newbie2]

Does anyone know where this is written with a clear explanation? Reason: husband lost his job and just recently took a job making about $1,000 less per month and we just modified our CH13 to surrender our house. During our session with our lawyer to do this, I asked do I report an increase of income above 10 percent of my old amount of income when I filed our do I look at our new lower income after we modified? He looked at me and not so sure sounding, said "the new lower income". Well...low and behold...it is now a very real possibility that I will be going from part-time/call-in status to full time in the next few weeks and my income could take us back up where we were with my husband's previous job. I know, I can't do anything until it happens, but I'm always a forward looking person. Any advice is appreciated!

Perhaps others will chime in, but I have not seen that 10% written anywhere. The plain language of the BK code states that "all disposable income" must be paid in to the plan over the life of the plan.

The only thing you can do is to call your attorney when your hubby receives the first couple of increased paychecks and go over it with him. Also remember, if your expenses increase because of the full time status to include them to help offset the pay increase.

Good luck!

[justbroke]

There is no rule. It's more a practice. Most of this is so Trustee and District specific, that you couldn't really pin it down. The bottom line is that significant increases in income will generally be met with a motion to modify confirmed plan and to increase your payments. How your District operates will be specific as well. Some Districts review your annual tax returns to see changes (and is why you have to submit the returns!). They may or may do anything.

Some Districts and Trustees have a "so long as you're paying your plan payment" everything is okay. They don't care. Which one you'll have is anyone's guess.

[lrprn]

The 10% income increase came from the pre-2005 bk law. When the current bk law went into effect in 2005, it did not include this parameter any longer. However, most local courts and Ch 13 trustees still use 10% as a rough guideline for when it makes sense to consider amending a less-than-100% plan to get more for creditors.

However as JB so wisely said, there's no consistency about this across the country. Each trustee decides for him/herself whether an income increase is sufficient to pursue or not. Every Ch 13 filer has to depend on their own lawyer to tell them what to expect in their situation.

[secondtimer]

I too am a "forward looking" personality and it drives me bonkers. Everytime I try to plan for the future it never works out. I'm now trying to live in the day "one day at a time" and only deal with things as they come.

When I finally file my 13 I'm going to "write it up" (with my Att of course) to reflect my situation on that day as opposed to what might happen in the future. Then let the court and my ATT worry about it.

[Flamingo]

The main thing to know that in a Chapter 13, your finances are not under your control - they are under the Trustee's control. Therefore, if your financial situation increases or decreases during the course of your Plan, it should be reported to the attorney. Now the issue here is what if it rises only $10 per month (example). What you need to do, as the others have stated, is ask your attorney what to do when there is any increase or decrease in your income, what to report to him, etc. If you are required to provide your tax returns yearly to your Trustee, always check with your attorney if there are any financial questions. Also note that if you are not required to provide your tax returns to the Trustee, the Trustee has the right at any time to ask for them so it's wise to always be open and honest with one's attorney.

[tammygirl1]

Hi All, does anyone know how the Northern District of CA deals with increases? Do we have to provide tax returns as other districts do and are they strict about amending or lax as other districts? I haven't had a chance to ask my attorney..still bugging him about filing questions..haha.
thanks

[kornellred]

Standing Chapter 13 Trustees issue a booklet to debtors at the 341 meeting. It contains all of the information the debtor needs to successfully complete a Chapter 13 payment plan.
Nowhere in the booklet I received is there any language describing a debtor's responsibilities relative to reporting changes in income. If there were any hard-and-fast rules, they surely would have been pointed out prior to plan confirmation.
If your trustee requires that you submit federal income tax returns on an annual basis, your financial status will be obvious. It will be "so ordered" in the BK Court's plan confirmation document.
If your trustee does not have such a requirement, there is no way for that trustee to know anything about changes in a debtor's financial status. There is no way that a debtor who experiences an increase in income is going to tell the trustee about it, if it is not a requirement.

My trustee does not review income tax returns on an annual basis. My attorney's advice at the conclusion of the 341 meeting: just make your payments on time, and comply with all of the court-ordered stipulations in the plan confirmation document.

[zeezee]

Standing Chapter 13 Trustees issue a booklet to debtors at the 341 meeting. It contains all of the information the debtor needs to successfully complete a Chapter 13 payment plan.
Nowhere in the booklet I received is there any language describing a debtor's responsibilities relative to reporting changes in income. If there were any hard-and-fast rules, they surely would have been pointed out prior to plan confirmation.
If your trustee requires that you submit federal income tax returns on an annual basis, your financial status will be obvious. It will be "so ordered" in the BK Court's plan confirmation document.
If your trustee does not have such a requirement, there is no way for that trustee to know anything about changes in a debtor's financial status. There is no way that a debtor who experiences an increase in income is going to tell the trustee about it, if it is not a requirement.

My trustee does not review income tax returns on an annual basis. My attorney's advice at the conclusion of the 341 meeting: just make your payments on time, and comply with all of the court-ordered stipulations in the plan confirmation document.

Ditto on my end. Things are exactly that way for my 13. But boy o boy, if they ever send in a random request for that information you better be ready to pay up some more loot if they want to modify your plan!

[debtinohio]

Ditto on my end. Things are exactly that way for my 13. But boy o boy, if they ever send in a random request for that information you better be ready to pay up some more loot if they want to modify your plan!

This is my plan :-) Afterall, they don't care that my house taxes, insurance costs, etc have all risen 10% in only 4 months into the plan.

[Billssuck]

Thanks all for your responses! My trustee too does not ask for copies of my yearly tax return although I know that he can ask for it at any time if he wants to.

Personnally, my income fluctuates from month to month as I am a part-time employee but serve in an on-call status six days a week. Therefore some months I don't make much and others I do quite well. So I really can't notify my lawyer each time I make a few extra bucks. But it was written in my confirmation letter that I must report increases in income above 10 percent and quite likely I won't know until I top the 10 percent rule until it is close to happening towards the end of each year.

From my attorney's answer to my question about the 10 percent rule, I think he was telling me his textbook answer but his tone of voice and something else he said when we were leaving his office leads to believe that if I just make my plan payments on time for the next two years that we'll be alright. If I do find myself making "consistent" extra money, I will let my lawyer know.