Chapter 13 and Income Changes

[avidreader]

I am new to the forum so please forgive me if these topics have been covered before. I read through some of the Stickys but did not find an answer, so I'm posting my questions here.

I am 5 months into a Chapter 13. It is not a 100% repayment, as I have seen mentioned in other posts. My two questions:

1. If income decreases significantly while in a Chapter 13 is it difficult to convert to a Chapter 7? If conversion is possible can one also include a mortage in the new Chapter 7 if the decrease in income makes it impossible to maintain mortgage payments?

2. On the other end of the spectrum, if you find a new job that offers a substantial increase in salary, say at least $10,000, is there any way to have some idea of how much of that increase the trustee will want to take and apply to Chapter 13 payments?

Any help will be much appreciated. Thanks.

[Pandora]

welcome to the forum

You can amend your schedules if your income decreases in your Ch. 13 and you should. Any reason why you'd want to convert vs. amending first?

As for any increases in income - it depends on what is on your confirmation order. Some trustee's want any and all pay increases while others dont. It really depends.

[NowImDownInIt]

My trustee only wants to be informed of raises over 10%. 10k would definitely warrant me informing him and he would probably modify my plan..

That being said, the BK code states that you commit ALL of your DMI for the first 36 months of your plan and in a five year plan I've read that post the 36 month mark, they won't generally go after your increased wages.

[avidreader]

Thanks to folks for their replies.

Pandora, to try to answer your question about conversion vs. amending, I had asked a lawyer at the firm I am using if the need ever arose to have the payments lowered was that an option. His answer was that my payments were already about as low as they could go.

I am paying $600 a month on a five year plan. The lawyer rolled car payments into the plan.

[Pandora]

Thanks to folks for their replies.

Pandora, to try to answer your question about conversion vs. amending, I had asked a lawyer at the firm I am using if the need ever arose to have the payments lowered was that an option. His answer was that my payments were already about as low as they could go.

I am paying $600 a month on a five year plan. The lawyer rolled car payments into the plan.

Your plan can be adjusted if you have unsecured creditors, so how much of your payment is going to secured and priority? Obviously your car payment is a secured...how much of that $600 is car? Did you roll attorney fee's in, and what is your trustee's %?

Have you been confirmed yet?

[NowImDownInIt]

Your plan can be adjusted if you have unsecured creditors, so how much of your payment is going to secured and priority? Obviously your car payment is a secured...how much of that $600 is car? Did you roll attorney fee's in, and what is your trustee's %?

Have you been confirmed yet?

I can see how, between the car and attorney's fees, this might be about the lowest he can go.

[LadyInTheRed]

I can see how, between the car and attorney's fees, this might be about the lowest he can go.

Yeah, I pay $500, including my relatively low car payment, and I couldn't go any lower.

[NowImDownInIt]

Yeah, I pay $500, including my relatively low car payment, and I couldn't go any lower.

When I modified, I couldn't go lower than $480 (for 60 months from $700 for 54 months) because of my car note. It was more than my budget would allow, so we had to shave A LOT out. Got used to the $700 payment.. Now I'm kind of used to the $480... Ironically, this was much more difficult. My pay dropped almost $30k a year, and I had another baby... so things do change and life does go on, even in a 13. You can still make it through.

[Pandora]

I can see how, between the car and attorney's fees, this might be about the lowest he can go.

Yeah, I see that as well - but I was curious to know if car payment was the majority of that $600 or ...?? Some people have car payments of $200 or less (ours is $187 @ 6.25% *i think % is right*) and we owe about 7K on it, but are paying it outside the plan. So if you added attorney fee's and trustee fees as part of the $600 / 36K base plan - that would still only account for around another 6K or therebouts, if everything was rolled. If the car is the majority of it, then absolutely he/she can go no further

[NowImDownInIt]

My car accounts for $400 of mine now. It's paid first. After it's paid off, all future payments will go to unsecured. I am willing to bet most of his payment is the secured debt, attorney's fees, trustee percentage. It's a rather low debt load like mine.. and if part of the reason he filed was threat of vehicle repossession (or in my case, actual vehicle repossession) that would explain why it was rolled in, or if his interest rate was very high. Rolling it in will bring the interest rate down in most cases. Mine went from 18% to 7%.