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Increases in Chapter 13 Repayment Plan

Four factors that may affect your Chapter 13 repayment plan

Many involved with Chapter 13 repayment plans are unaware that certain financial changes may affect the monthly payment, and are suddenly hit with an increase, one they may not be prepared to pay. If you are considering filing Chapter 13 bankruptcy or are currently making payments under this plan, you will want to become aware of four factors that may lead to an increase in payments.

Chapter 13 bankruptcy essentially allows you to combine all your debts into a single payment, which is then distributed to the individual creditors as arranged by the bankruptcy trustee. It is the repayment of all, some, or none of your accrued debt over a single three to five-year period.

Your monthly payments may increase due to any of the four factors below:

1. Overtime Pay

Overtime pay can increase or decrease the amount owed every month.  The trustee will look into increasing your payment if it looks as if the pattern of extra earnings will be sustained for more than a short period of time. If the overtime pay was factored into your original payment plan, but it ends, then your monthly payment might be lowered.

2. Car Payments

Oftentimes, those who file for Chapter 13 bankruptcy are making car payments simultaneously. If the car payment is paid in full prior to the Chapter 13 bankruptcy payments being completed, the trustee may conclude that you have additional funds available to pay your creditors, and proceed to increase your monthly payment accordingly.

3. Retirement Loan Repayments

Similar to the instance above, a retirement loan that is paid off before Chapter 13 payments are complete may result in an increase in your monthly payments at the trustee’s discretion.

4. Child support, spousal support, and child care expenses

Once child support or alimony payments are no longer required, your Chapter 13 payment plan can increase. This often happens when childcare expenses end in the event that the child starts school prior to the end of your bankruptcy repayment term.

While your financial status is taken into consideration at the time you file for Chapter 13 bankruptcy, your situation can change over time. If you are in search of a bankruptcy attorney in West Palm Beach to review your specific Chapter 13 situation, Kelley & Fulton invites you to set up an initial consultation today.