Does Temporary Increase in Income Affect Chapter 13 Bankruptcy?

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."

View all posts by Reed Allmand


Subscribe to our e-mail newsletter to receive updates.


Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients