June 8th, 2009 by Reed Allmand 
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.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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