A Chapter 13 bankruptcy is designed to allow debtors the opportunity to repay creditors over a three to five year period while keeping their assets. The amount of debt that is to be repaid and the monthly payments required is determined at the start of the bankruptcy case but this amount is not fixed and can be changed based on fluctuations in the debtor's income or expenses. Unfortunately, some debtors in Chapter 13 bankruptcy have made the mistake of doing things to try to manipulate this system.
Below are three things a Chapter 13 bankruptcy debtor should never do:
- Do not artificially or purposely reduce your income in an attempt to reduce your Chapter 13 bankruptcy payments. In the Chapter 13 bankruptcy case of John and Jill Brown, Mrs. Brown allegedly had her income reduced by several hundred dollars in an attempt to reduce her Chapter 13 bankruptcy payments. This was one of the reasons her bankruptcy case was subsequently dismissed.
- Do not hide increases in your income from the bankruptcy court. Yes, an increase in income can increase your Chapter 13 bankruptcy payments. Even if your increase in income is temporary, please let your bankruptcy attorney know about it so that he/she can notify the court and at least argue that an increase in monthly payments are not necessary because the income increase is temporary.
- Do not disobey bankruptcy court orders to hand over proof of income documents. Failure to hand over documents to the bankruptcy court when told to do so can end in the dismissal of your bankruptcy case.