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  1. #1
    Join Date
    Sep 2007
    Posts
    2

    Default Income Changed During Chapter 13 Payment Plan

    Hi everyone,
    I was hoping someone could tell me how long it takes for the trustee to change my payment amount in chapter 13 after i receive a raise in income. I just filed this year in august, and my payment is pretty low, but my lawyer has already maxed out the IRS national standards for living expenses and says that he will not be able to "hide" much more of my income when i receive a raise. I should be receiving about 700.00 more a month (that is after taxes) when my raise goes into affect in November. He told me that the trustee will look at my tax returns to determine if my income changes, and develop a new payment plan to account for the new income. He said that i should just file a tax extension with the IRS and wait as long as i legally can before filing and sending in the tax form to trustee. I was just curious if anyone else has ever had such a big change in income, and how long it took the trustee to catch it. Any info would be appreciated!
    THanks

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    74,087

    Default Re: Income Changed During Chapter 13 Payment Plan

    Is your lawyer hoping that your repayment will be complete before you have to ultimately file your tax return?

  3. #3
    Join Date
    Sep 2007
    Posts
    2

    Default Re: Income Changed During Chapter 13 Payment Plan

    No. I just started my repayment plan in august. I have still have 58 more payments to make. He is just suggesting that i try to keep my additional income as long as possible. And by waiting to turn in my tax return, the trustee wont find out right away that i have a received the raise. So basically i am curious if anyone else has gone through this, and i am curious to see find out how long it takes for a trustee to spot the raise and increase my payment.
    Thanks

  4. #4
    Join Date
    Nov 2007
    Posts
    3

    Default Re: Income Changed During Chapter 13 Payment Plan

    I work in Chapter 13 and it sounds like your lawyer is telling you wrong, which I've found to happen quite often in Chapter 13 cases.

    Plan payments are not based upon what you earn, they are based upon what you owe your creditors.

    If you happen to have a lot of disposable income, your payments COULD be increased because your repayment to creditors may become higher, but higher payments are usually only done that way before you file.

    If you don't tell the Trustee that you got a raise, they won't know.

  5. #5
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,638

    Default Re: Income Changed During Chapter 13 Payment Plan

    Plan payments are based on the debtor's disposable income.

    The trustee may require the debtor to provide copies of her annual tax returns, and may also require the debtor to report significant increases in income. Increases can lead the trustee to review the debtor's disposable income, to determine if there should be an increase in payments. If, as is obviously the case here, the trustee is requiring submission of copies of the debtor's tax returns, assuming the debtor complies the trustee will know whether or not the debtor's income has increased.

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