Substantial pay increase in Chapter 13

[changed1]

New here! I looked in the forums and couldn't find a recent post about this topic, so I'm just going to ask. Background- My husband and I have been in BK13 for almost 2 years. We really didn't have any other choice, as we were about to be sued by a credit card company due to a dishonest "credit counselor" that did not make payments on our accounts, yet we paid him $800 every month to make the payments for us. He told us that they "never" take people to court, but we were served papers and had to do something. We filed for bankruptcy to avoid court and being required to pay the bills in full.

We now have a budget and our plan is going pretty well so far. I recently finished a program in college that allows me the opportunity to apply for positions that would practically double my monthly income. If I were to take a job that would dramatically increase my income, what would happen with our presently manageable BK13 plan? Would our plan be revoked? Or, would our payments increase to a point that the raise wouldn't matter? I have been putting off interviews because I am worried that the Trustee would just take all the increased income, and it wouldn't be worth the added stress of the new job. However, it feels weird that I should delay a promotion (for 3 more years) due to our BK13. I really don't want to mess up our payment plan that has really improved much of our desperate situation. However, it is hard to let opportunities pass by when we are trying so hard to turn things around.

Thanks in advance for your knowledge and help!

[despritfreya]

First, welcome to the Forum.

Second, if you have an attny you should discuss the ramifications of this potential change with him/her.

Third, my continued comments are based upon my dealings with clients similarly situated but not in Oregon.

Potentially, you would have to report the change and increase payments based upon a new Schedule I and J.

The Order Confirming your Plan may, or may not, specifically require you to report changes in income over a certain percentage. If it does, you need to comply with the Order. Assuming it does not, maybe it requires you to supply copies of future tax returns.

If you are required to supply the tax returns, and those returns show a major change in income AND someone at the Trustee’s office bothers to look, the Trustee will find out. However, while a Trustee does have the ability to file a Motion to force a Plan modification due to changed circumstances, I personally have never seen such happen because. . . if your Plan has been confirmed, the Trustee has moved onto other files and no one is watching. So long as you do not muddy the waters by missing Plan payments or requesting any modifications/moratoriums no one at the Trustee’s office is going to notice.

Des.

[changed1]

Thanks for your response. I believe we are required to report anything that increases our yearly income by 10% or more. I would follow the rules of course, but I'm wondering if this would change our payment plan by a huge amount and we could end up struggling to make our payments to the trustee. I also wonder if the trustee ever decides that due to an increased income, debtors no longer need to be in a BK13 and revoke it, causing a worse situation. I asked our lawyer about this, and she said to report everything and fill out new I & J for any changes. I'm really wondering if anyone has experienced this, and how much difference it actually made in their trustee payments?

I am very grateful every day that I have a job. However, it seems that it gets much more complicated as I attempt to move up the ladder in my career and balance the requirements of our BK13.

[despritfreya]

If you are required to report the change because it is over 10% then you would fill out a new I and J (as stated by your attny) and modify your Plan accordingly. Your Plan payment would be adjusted to the amount your new budget said you could afford. Your case would never be thrown out. If you can afford to, you simply would pay 100% of all "allowed claims" and, depending upon the amount of those claims, just maybe your Plan would end early.

Des.

[helpmeout]

Your payment may go up. That is something that you will want to discuss with your attorney.

That said, don't put off starting your career. Even if your payment goes up, in the long run, you will be better off having gotten some experience in your field.

[IM2Stressed]

If you are in a 100% plan then increased income has no affect (except you are very fortunate!).

You mentioned that you had a fraudulent credit counselor. I hope your trustee or other sued them? It probably makes no difference in your current situation, but I have seen trustees go after these types.

[changed1]

Thank you, thank you for your responses. We did discuss our concerns about the shady "credit counselor" with our attorney, and she did not seem to think it would be worth the fight. We could not even get payment records from the jerk to give to the paralegal when we were first filing. Every time we called his office he hung up on us. We were so shocked and scared about the impending and unexpected lawsuit from the credit card company, that we focused all our energy on the BK and getting all the necessary paperwork in order. I am still very frustrated by the whole chain of events that occurred while we were trying to get back on track from the stress of job loss and the bottom completely falling out. We went to the credit counselor to avoid bankruptcy, but as I said earlier, we literally had no other choice once we were served court papers-totally unexpected and out of the blue, at that.
Now I am wondering one more question about our payment plan. Do trustees ever ask for a case to be opened up to add more payments for unsecured debts? In other words, if your situation improves, can they ask for more money to go to the unsecured debts? I know it is the trustees job to get more money for credit card companies, and I wonder if increased income could cause them to look again. Or, once your case is confirmed, that is the amount you pay, period.

This website has done so much to make me feel less alone in this difficult process. Thank you for your help.

[LadyInTheRed]

Do trustees ever ask for a case to be opened up to add more payments for unsecured debts? In other words, if your situation improves, can they ask for more money to go to the unsecured debts? I know it is the trustees job to get more money for credit card companies, and I wonder if increased income could cause them to look again. Or, once your case is confirmed, that is the amount you pay, period.

If you have to submit a new Schedule I and J and they show you have more disposable income, and your payment goes up as a result, the unsecured creditors will receive more than originally projected in your plan. But the length of your plan will not be increased because of an increase in your income and no creditor will receive more than the amount of their approved claim.

[isabella]

I was confirmed to my plan 3 years ago this month. I have had substantial increases in income. I reported them to my attorney which that stated as long as I make my payments on time to not worry about it unless the Trustee asks, I have nearly doubled my income since filing and do provide tax returns every year.

[LadyInTheRed]

I was confirmed to my plan 3 years ago this month. I have had substantial increases in income. I reported them to my attorney which that stated as long as I make my payments on time to not worry about it unless the Trustee asks, I have nearly doubled my income since filing and do provide tax returns every year.

That's my experience too. Every plan and trustee is different. That's why it is important for anybody with changes in income during a Chap 13 to contact their attorney, regardless of the experiences of others.