The Allmand Law Firm, PLLC Difference

Unlike most bankruptcy firms in the Dallas / Fort-Worth area, Allmand Law Firm, PLLC spends the time to understand the complete financial picture for every one of our clients. We provide resources, tools and advice to address the unique needs of North Texans.

Does Temporary Increase in Income Affect Chapter 13 Bankruptcy?

Posted By admin || 8-Jun-2009

Debtors who file for Chapter 13 bankruptcy are placed on a payment plan based on their income and expenses. If that income increases, the plan may change; but if it is only a small temporary increase it is unlikely the Chapter 13 bankruptcy would be affected.

Let's take a closer look:

Debtors in Chapter 13 bankruptcy must pay their secured and priority creditors first.  After those creditors are paid, the debtor in Chapter 13 bankruptcy must pay between 0% and 100% of their income to unsecured creditors. This percentage is determined by the debtor's income, expenses, secured debt, priority debt and trustee costs. Usually if a debtor's regular ongoing wages increase by 10% or more that extra income may affect the debtor's Chapter 13 bankruptcy payment obligations.

For example, if a debtor is earning $3,000 a month and gets a raise to $3,300 a month, that's a significant increase and at least some of it may need to go to creditors. If you have filed a Chapter 13 bankruptcy case and receive a raise or extra income, you must notify your bankruptcy attorney who will help you determine what new obligations (if any) you have to your creditors.

Categories: Chapter 13 Bankruptcy
Blog Home