If you filed for Chapter 13 bankruptcy, you’ll be in a debt repayment plan for three to five years, and a lot can happen in that amount of time. One of the most common events to happen during Chapter 13 bankruptcy is that your income increases. Here’s what you need to know about getting a promotion and earning more money while in Chapter 13 bankruptcy.
No matter how little your raise is, it is required that you report an increase in income to the bankruptcy trustee immediately. If you’re working with a bankruptcy attorney, let them know about your promotion so that they can report the change to the bankruptcy court. Be sure to be specific, because misreporting your income could land you in trouble.
Repayment Plan Changes
If your income rises by only a small amount, the bankruptcy trustee might not make any changes to your plan. But there’s no way to determine if your plan will be affected or not until you report your income changes. However, if your income increases by a large amount, it’s very likely that the bankruptcy trustee will demand that you pay more money to your creditors. For example, if you filed bankruptcy while earning $2500 a month, but you get a raise of $1000 per month, you’ll need to pay more to your creditors since it’s required that you use your disposable income to repay creditors when in Chapter 13 bankruptcy.
If you get a promotion and/or raise while in Chapter 13 bankruptcy, be sure to report your change in income to the bankruptcy court immediately. If you delay or fail to reveal the change, your actions could be perceived as bad faith and that could jeopardize your case.