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Chapter 13 Plan – Getting a Raise

What if You Get a Raise During Your Chapter 13 Plan?

Chapter 13 Plan – Getting a Raise.  What will happen if you get a raise during your Chapter 13 plan?   Is it a good thing or a bad thing?  Can it cause your Chapter 13 plan payment to increase?   Receiving a raise during your Chapter 13 case can potentially alter the pay-back requirements for your Chapter 13 plan.  It is important to understand a few general things about how a raise of income relates to your Chapter 13 case.

You May Be Under Duty to Report Your Raise

You may be required to report your raise to your attorney and the Chapter 13 trustee.  Generally, if the raise is substantial such as an increase of income more than 10-15%, you should always report it to both your attorney and the Chapter 13 trustee.  Although no increase in your Chapter 13 payment may be required, you are generally under duty to report substantial changes of income to allow these changes to be reviewed by trustee.

Raises in Some Chapter 13 Cases Will Not Increase the Plan Payment

However, in some cases, a substantial raise income will also cause the trustee to motion the court for an increase in repayment to your creditors.  In such cases, your Chapter 13 plan payment must increase to meet the new repayment requirements for your new income level.

The Chapter 13 trustee, however, usually does not want to unreasonable burden the Chapter 13 case filer.  The trustee does not want to overburden the case filers to the point where finishing their Chapter 13 plan becomes less likely.   Sometimes the Trustee will not seek the maximum amount possible with the income level (such as turning the whole additional raise amount over for a payment increase).   They will many times settle on a lesser amount negotiated by your bankruptcy attorney.

For more information on filing Chapter 13 Bankruptcy, check out our Chapter 13 Bankruptcy info.  Bymaster Bankruptcy Law Offices offers FREE consultations.  Call us today at 317-769-2244.

Chapter 13 Plan - Raise in Income

Chapter 13 Average Monthly Payment

What is the average Chapter 13 monthly payment that most people face during their Chapter 13 case?   Although an average amount can be estimated, different types of cases result in different ranges for calculating an average Chapter 13 monthly payment.  The average payment for a Chapter 13 varies within these various case types.

The Overall Chapter 13 Average Payment

The average payment for a Chapter 13 case overall is probably about $500 to $600 per month.   This information, however, may not be very helpful for your particular situation.  It takes into account a large number of low payment amounts where low income debtors are paying very little back.  Then it averages out the larger payments of $1000 to $2000 or more.  These higher-payment-cases are usually due to higher income and housing repayment requirements.   Cases in the $500 to $600 range are very common and reflect debtors who are usually paying at least one automobile through the plan and possibly some other “average-type” repayment requirements.

Chapter 13 Bankruptcy Payment Due

The Low-End Chapter 13 Payment “Average”

Cases within the $200-$300 per-month range (or less) are extremely common within the Chapter 13 system.  These cases usually reflect medium to lower income debtors who need to only address some basic repayment requirements.  Also, sometimes these lower-average cases are for situations where debtors are “forced” to file Chapter 13.  In such cases, the debtor cannot file Chapter 7 because they are currently “barred” (unable to file Chapter 7 because 8 years has not yet passed from filing of a previous Chapter 7).

Paying House Payments and Arrears Cause the “Average” to Be Much Higher

If you are facing foreclosure or are behind in house payments, your Chapter 13 plan payment will be much higher.  The “average” plan payment for such cases is usually closer to $1500 per month.   Sometimes it can even be much greater.  This is simply because the normal, ongoing mortgage payment along with the arrears must be fully paid throughout the life of the plan.   In addition, the Trustee usually charges a “conduit” fee to pay the ongoing mortgage payment through the plan.   The average plan payment is always higher in such cases.

High Income Bumps Up Your Average Payment

If you have high income, your “average” monthly Chapter 13 plan payment will likely be bumped up considerably.  Depending on the range of your income, your payment could raise much higher.  High income, high debt Chapter 13 filers very frequently face payments averaging in the $2000-$3000 range or even greater.  On average, Chapter 13 will force such filers to repay a high percentage of the debt.  Many times this will rise up to the 60%, 80%, or even 100% range of repayment.   Still, these debtors will receive all the benefits of the Chapter 13 including 0% or dramatically reduced interest rates.  They will also benefit from the rigid protections that Chapter 13 always offers.

Chapter 13 Plan Payment Too High?

Is your Chapter 13 plan payment too high in your bankruptcy case?  You can sometimes have your bankruptcy trustee agree to reduce your plan payment.  Your Chapter 13 plan payment can be reduced due to variety of reasons.  If your payment is too high, such a reduction can save an otherwise impossible case.

Chapter 13 Bankruptcy Payment Too High

Reduction in Income Could Reduce your Payment

If your Chapter 13 plan payment is too high, you can sometimes get it lowered if you encounter a reduction in household income.  If your income reduces, you are many times also allowed to reduce your plan payment.   This is accomplished usually by filing a Motion to Modify your Chapter 13 plan.   Or, alternatively, if your plan is not yet confirmed, you can sometimes just have your attorney file an amended plan.  If your income has dropped considerably, you may even be able to convert your case to a Chapter 7 in some situations.

However, even if your Chapter 13 plan payment is too high, you cannot always reduce it simply due to a drop of income.  Some cases are already calculated at the absolute minimum level for achieving your Chapter 13’s goals.   For instance, if you are paying your mortgage and car payment through the Chapter 13 plan, you could very likely already be paying the minimum amount required for case.   In such cases, a drop of income would have no effect on reducing even an impossibly high Chapter 13 payment.  You would likely need to change the plan by surrendering the car or house in such a situation in order to drop the payment any further.

“Changing Your Plans” to Change Your Payment

Your plan payment can many times be reduced in Chapter 13 by “changing your plans.”  For instance, consider if you changed your plans by surrendering an over-priced, high-balanced automobile in your Chapter 13 case.   If this automobile had a balance of $35,000 in your Chapter 13 case, you could reduce your Chapter 13 payment up to even $650 per month.  Surrendering a house, a boat, a motorcycle, or other items can also sometimes have a similar effect.

Remember, however, not all cases are alike.   Every case has different requirements on repayment to creditors.  If your income is too high, you may not realize a significant reduction in your plan payment by “changing your plans.”  You may be required to pay back up to 100% of your debt in your Chapter 13 case depending on your debt and income levels.  Although you will generally always reduce your plan payment by surrendering items, a 100%-pay-back case may not receive the same dramatic discount on plan payment that other cases may realize in surrendering items.

Changes in Expenses or Circumstances

When a Chapter 13 payment is too high, a change of expenses or circumstances can also warrant a reduction in your Chapter 13 plan payment.  New expenses (if high enough) are many times valid justification for reducing your plan payment.  For instance, if a family is required to take on massive new daycare or child care costs, a reduction in the Chapter 13 plan payment may be possible.  If a family member becomes ill, this may result in new medical costs and a reduction of the Chapter 13 plan payment may be possible.

If your circumstances change, you can also sometimes reduce your Chapter 13 plan payment.  For instance, if you are encounter marital problems and become separated, you may be able to reduce your plan payment.   If more family members or dependents are added to your home, you may also be able to reduce your plan payment.

Chapter 13 Payment Too High?  Bankruptcy Lawyers Have the Know-How

Remember, always seek the advice of an experienced bankruptcy attorney if you want to reduce your Chapter 13 plan payment.  Most Chapter 13 bankruptcy attorneys have dealt with these Chapter 13 payment issues hundreds of times.  They have the experience to explain exactly what is possible in reducing your payment.

Bankruptcy Waiting Period

Bankruptcy Waiting Period

How Long is the Bankruptcy Waiting Period?

What is the time in which you must wait between filing one bankruptcy to the next?  The bankruptcy waiting period requires you to wait for eight years in between filing Chapter 7 bankruptcy cases.

The Bankruptcy Waiting Period is Based on the Bible

The United States bankruptcy code is patterned after the Bible’s required release of debts that occurred every seven years.  In conformance with the Bible, Congress established that the term was originally to be seven years for the bankruptcy waiting period.  In October 2005, the law was changed to make this period longer.  The bankruptcy waiting period is now eight years.  Remember, even if you’re a full eight years has not yet arrived, you may be able to take advantage of other forms of relief within the bankruptcy code.

Other Bankruptcy Waiting Periods

The other bankruptcy waiting periods determine how long you must wait between other chapters of bankruptcy.  If you’re going between Chapter 7 to Chapter 13, you must wait four years if you want to receive a discharge in the Chapter 13 case.

There are also other waiting periods such as going from a Chapter 13 to a Chapter 7. In such a case, you must wait six years from the date you filed a Chapter 13 to the date you filed for Chapter 7 if you received a discharge in the Chapter 13 case.   There are also less waiting periods in various other situations.

It is important to seek the guidance of an experienced bankruptcy attorney to make sure that you are fully utilizing the bankruptcy code to meet your needs.  Reviewing a bankruptcy waiting period chart may not fully explain what current rights you may be able to take advantage of within the bankruptcy code.

Bymaster Bankruptcy Law Offices offers free consultations.  If you have questions about bankruptcy give our office a call at 317-769-2244.


Bankruptcy and Donating to Charity

Bankruptcy and donating to charity are not entirely incompatible with each other. Donating to charity is a respected and considered desirable by the government.  Therefore, donating to charity is allowed to a certain extent within the framework of bankruptcy.  However, there are some limitations.

Regular charitable donations

Charitable donations that have occurred regularly in the past are generally allowed to continue during the Chapter 7 or Chapter 13 bankruptcy process.  As long as these regular, ongoing donations are reasonable in amount, the bankruptcy court will usually have no problem with them.   The court generally does not want to see ongoing charitable donations that exceed 15% of the bankruptcy filer’s income.   Therefore, if you have regularly given to a church or other charitable organization in the past, you may be able to continue to do so during the bankruptcy process.   Still, it is vital to seek legal advice with a bankruptcy attorney in such matters.

Out-Of-Ordinary or Large Donations

Any large or out-of-ordinary donation to charity before or during bankruptcy will be placed under heavy scrutiny in the bankruptcy court.  Generally, any large gift given away before or during the bankruptcy process will be heavily scrutinized by the trustee in bankruptcy court.  This is because the court may interpret your large gift as an attempt to deny proper payment to your creditors.  

Even a gift to charity can be considered a fraudulent transaction if the circumstances appear that you are attempting to defraud your creditors by simply giving the money away.  Although the bankruptcy court esteems donation to charity in high regard, the court will come down harshly on any attempt to dispose of assets that could have otherwise been used to repay debts.  The court considers such improper donations.  The court may consider actions against you such demanding the repayment of the money or denying your discharge in the bankruptcy case.

Talk to a Bankruptcy Attorney About Donating To Charity 

If you want to make charitable donations and are considering bankruptcy, you need to speak to a bankruptcy attorney as soon as possible.  Seeking general information about donations and bankruptcy is limited.  If you are considering filing for bankruptcy, you need to set up a consultation with a bankruptcy attorney.

Can you file for bankruptcy if you donate money to charity?

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