I recently discussed the four ways a chapter 13 New York bankruptcy repayment plan can be modified. The four mechanisms aren’t necessarily the same thing as the reasons parties to the repayment plan might be interested in modifying it. One reason that concerns debtors is if either the trustee or the creditors will move the bankruptcy court to modify the plan because the debtor’s income has increased.
It’s an important question because unless an increase in income ensures the debtor will exit chapter 13 more quickly, the debtor won’t have much of an incentive to earn more money. On the one hand, the debtor’s motivation to get ahead is important, but on the other the point of bankruptcy is to ensure the creditors are paid fairly. That means that all of the debtor’s disposable income will go to the repayment plan.
Obviously debtors should not try to conceal an income increase from the trustee, and the Bankruptcy Code tries to prevent this by requiring debtors to submit their income tax forms to the trustee for review. Also, debtors caught concealing income increases might have their discharges denied, which is definitely not something someone diligently making chapter 13 would want to see happen.
The good news, though, is that the trustee usually won’t try to modify the debtor’s payments upward unless the change in income is particularly high. Sometimes monthly income increases as high as $500 will be allowed to go to the debtor. Additionally, debtors whose regular expenses increase along with their incomes can use the expenses as offsets against their incomes. If the net increase is still sufficiently low, then the trustee might not press it further.
If you think your income will increase over the course of a chapter 13 repayment plan, then you will need to hire an experienced New York bankruptcy lawyer who will help ensure that you keep as much of the increase as possible.
For answers to more questions about bankruptcy, chapter 13, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Chapter 13 Bankruptcy Lawyer Brooklyn NY Bruce Weiner for a free initial consultation.