Free Consultation

Call us right now. Or let us Call You!

(317) 769-2244
Fields marked with an * are required

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.

Spring Clean Your Finances

What does it mean to spring clean your finances?  Spring cleaning occurs every year.   Some people clean up their yards.   Others deep clean their houses, removing unnecessary items.  Many people also attempt to “spring clean” their finances.  Getting things in order in your financial life could be the most important decision you make all year.  Extend this year’s spring cleaning into a brand-new domain by seeking some of the below goals for your finances.

De-Clutter Your Financial Life

Just as we “de-clutter” our house, sometimes you also need to de-clutter your finances.   You can de-clutter your finances by removing all unnecessary items out of your budget.  Your goal should be to reduce your expenses as much as possible.  Some expenses may be possible to reduce or rearrange.   Some expenses will simply need to be eliminated.

Systematically Pay Off Your Debts

Taking care of your debts and becoming as debt free as possible should also be your goal when Spring cleaning your finances.   The most basic way of achieving this is to make a plan to systematically pay off your debts.   Although your plan may take several months or even a few years, you should always have a solid plan for permanently eliminating your debt.  If you do not have this plan, then your financial house will remain in impossible disorder.  Plan for where every dollar goes and make sure every dollar counts towards your long-term goals.

Settle Your Debts

When Spring cleaning your finances, sometimes a particular debt may be too large to pay in full.  Many times, you can allow these debts to go into default and then arrange to pay the debt off with a single lump sum payment.   Sometimes you can only pay as little as 20-30% of the original debt.  If your debts become too large to repay, settling your debts can be a wonderful technique for putting your financial house back in order.

File for Bankruptcy

Spring cleaning your finances sometimes requires more bold and powerful action.  If your debt situation is truly impossible, you need to seek the advice of a bankruptcy attorney.  The most common time that people file for bankruptcy is during Spring.  A bankruptcy attorney can guide you through the bankruptcy process.  In addition, if bankruptcy is not the correct choice, the attorney will very likely also present other options for dealing with your debts.

Take Action Right Away

Do not be afraid to take bold action when Spring cleaning your finances.  Your financial life needs to be in order. It is actually even much more important than just the physical order of your home!  Make it your goal to get your financial Spring cleaning plans into action as soon as possible.

Indianapolis Bankruptcy Attorney John Bymaster explains how to spring clean your finances.

Financial Action Plan, Game Time!

FINANCIAL COURSE #7

Financial Action Plan

The final step to a complete financial overhaul is the Action Plan.   The action plan is where the “rubber meets the road.”  If you have followed the previous lessons in the series, you have grown in knowledge.   You have also grown in determination to live your financial life in totally new ways.  It’s game time!  Now you need to make a reasonable action plan that you can carry out in the next year.  This section is critically important for a true financial overhaul after bankruptcy!

Make a Simple Plan You Can Commit to Follow

In order for your action plan to be successful, make sure it is simple and easy to follow.  Set your goals out 3-6 months.  Set goals out for one year.   Never exceed these amounts – at least at the beginning.

Do not set complex goals where you do not understand certain steps in how they will be completed.  Keep it simple!   Plan to learn about a topic before you set goals within it.

For instance, do not make a plan where you will be a successful marketer or web designer making $150,000 by the end of the year.  Instead, plan to attend every web and marketing conference within the Midwest area, learning what it takes to be a successful marketer.   Then, plan on engaging 5 clients within the year with excellent results.  This goal is an example of a goal that is achievable.  With a goal like this, you are not leaving out several steps.   Then, set your $150,000 goal for the next year or the year following.

As another example, do not plan on increasing your passive income by $3,000 by the end of the year.   Instead, plan on decreasing your expenses to the absolute lowest amount possible.   Then, set a plan to pursue any form of passive income within the near future – no matter how small.  If you have drastically decreased your expenses and obtained any form of passive income, this is still a major accomplishment within a one-year time frame.

Set High Goals

Although your goals need to be simple, you can set them high goals when the time is right.  Acquire knowledge and experience within a particular area.  Then, the sky is the limit!   Make sure to set high goals.  These goals may not follow what other people are doing around you.  Still, if your goals are well-thought out, you may be able to excel in areas where other people only settle for much less.

Make Sure Your Action Plan is Also Possible and Reasonable

While you set high goals, always keep your action plan possible and reasonable.  If you cannot reasonably think out a set of circumstances where your goal will come true, then you are possibly thinking too much “in the clouds.”   Keep your goals down-to-earth and base them on observable facts.   For instance, if your local market cannot sustain your goal, your goal may simply be ill-thought or impossible.  Adapt to the financial knowledge that you obtain and then act on it with well-thought-out plan.

Plan to Make a New Action Plan Every Six Months

Even if you have year-long and multi-year goals, it is important to review your situation and adjust your plan every six months.  This six-months principle will allow you to adjust and stay focused, but also give you sufficient time to make headway in your goals.   Goals must change and circumstances change and your financial knowledge increases.  Make sure to use this six-month principle to make your goals adapt accordingly.

Conclusion: The Sky is The Limit!

If you have truly applied the principles taught in this financial overhaul series, then the sky is the limit!   Instead of money always working against you, the future will have money working for you.  Make plans every year for your net worth and your passive income to increase.   They will.   Make plans to increase in useful financial and business knowledge each year.  It will increase.   Being responsible and productive with financial matters will take you to new heights that you never thought were possible before.  Go all in – it will be worth it!

 

Never Take the “Easy” Way – Course #5

Why does everyone take the easy way in life?  It’s simple – it’s easy!   It is much easier to do things the fast “easy” way instead of doing things correctly and thoughtfully.   The easy way has an immediate reward.   The correct and thoughtful may reward you many-fold over a life time.  One of the most important lessons to learn for financial success is to never take the “easy way.”

Taking the “Easy” Way Destroys your Chances for a Financial Future

Taking the “east way” destroys most people’s chances at a successful financial future.  By taking the easy way, you are essentially trading your future financial success for the “now.”  If you want a car “now” by financing it, then you are destroying your chances at saving for investments in the future.  If you buy a mortgaged house, then you are destroying your chance to learn how to acquire a house (or many house) paid-in-full by careful financial planning.

Almost every time you take out a loan, you are trading your financial future for the immediate.   Credit Cards and loans are an easy way to pay for life expenses, but they doom you to financial failure almost every time.   In fact, if you are taking out loans for living expenses, you are likely already to financial planning and are “taking the easy way out.”

Taking the “Easy” Way Destroys your Motivation for Learning About Financial Things

If mortgage loans were outlawed next week, do you think that would end most people’s desire to own a home?  Absolutely not!   Most people would immediately seek knowledge or understanding on how to buy a home paid-in-full over some short period of time.   Perhaps, they would create other creative ways for purchasing a home that would not involve mortgages.  In any case, the public would quickly be forced to gain considerable financial knowledge and discipline in order to achieve the now “harder” goal of purchasing a house.

Financial Education Course 5 - Never take the easy wayMortgages or other financial practices do not need to be outlawed: you can chose to gain considerable financial knowledge and discipline to take the “harder” way even if “easier” options are still available.  The real twist to the “easy” versus the “hard” debate  is the very words in which they are described.  In reality, the “hard” way of doing things is actually much easier over time if it is applied.   The “hard” way is actually not hard at all: it is just the correct and moral way of living your financial life.

We all have heard of the concept of being a good steward with our lives.   We all have the moral responsibility to manage our lives in the most productive and orderly way possible.   This is the very fabric on which our society is built.  When you do things the hard or correct way, then you get to very much take advantage of the peaceful financial systems that our present in our world.  You essentially are able to allow “money to work for you” – instead of just “working for money” your whole life.

For example, a person that diligently studies and saves to buy a paid-in-full home will be much benefited by not having to pay mortgage payments.  If he was able to acquire the paid-in-full home over two to three years, then what is stopping him in the future?   The same person can acquire one, two, or maybe thirty more paid-in-full properties over a lifetime.  He can receive rental income from these properties.  From this income, the decreased demand for “job” income can even give the person more time to build their financial knowledge.  Later in life, this same person could have a multitude of real estate or business-based assets generating income.

Or, the same person could have gotten a mortgage.  His financial “mind” would have stopped there.  He would probably still be paying on the same mortgage twenty years later.  He would only partially own one mortgaged house.

Conclusion: The “Easy” Way is Dangerous

Do you understand now the danger of doing things the “easy” way with finances?   The “easy” way is actually a deception: it is much, much harder over a lifetime.   If your financial past is dominated by the “easy” way, you may need to completely start over in life.   Your commitment to following the “harder,” correct way of approaching finances may require you to make some drastic changes.  These changes may be incompatible with your previous, “easy” way of going about your financial life.

Test Your Knowledge!  Take The Quiz!

Quiz 5 – Never Take “Easy” Way

Future Courses Will Be Released Soon!

Do the Opposite of Everyone Else – Course #6
Action Plan – It’s Game Time!  – Course #7