The Short Answer
Your Chapter 13 payment is not permanently fixed — it can go up or down depending on changes in your income during your 3-to-5-year repayment plan. If your income increases significantly, the trustee can require higher plan payments to reflect what you can now afford. If your income drops — due to job loss or a major pay cut — your attorney can file a motion with the court to reduce your payments. Whether a decrease is approved depends on how much you owe secured creditors, taxes, and other priority debts.
<p>http://www.youtube.com/watch?v=JYco2Eu7ppw<br />The bankruptcy law allows Chapter 13 bankruptcies to last anywhere from three to five years. If you are required to file a <a title=”Chapter 13 Bankruptcy” href=”https://www.duncanlawonline.com/bankruptcy/bankruptcy-types/chapter-13-bankruptcy/” target=”_self” data-mce-href=”https://www.duncanlawonline.com/bankruptcy/bankruptcy-types/chapter-13-bankruptcy/”>Chapter 13 bankruptcy</a> because you do not pass the <a title=”What is the Means Test?” href=”hthttps://www.duncanlawonline.com/what-is-the-means-test/tp://” target=”_self” data-mce-href=”hthttps://www.duncanlawonline.com/what-is-the-means-test/tp://”>Means Test</a>, then your Chapter 13 repayment plan is required to be for 60 months, unless you can afford to repay 100% of your unsecured debt in less than 60 months.Often, Chapter 13 bankruptcy debtors are apprehensive of their Chapter 13 payment for fear that over the course of three to five years, their job situation may change. It is common for people to ask, “Will my Chapter 13 payment change during my bankruptcy?”There are two ways to answer this question:1) Whether your Chapter 13 payment will <em>increase</em> during your bankruptcy, and2) Whether your Chapter 13 payment will <em>decrease</em> during your bankruptcy.<img class=”alignleft size-medium wp-image-3741″ style=”border-style: initial; border-color: initial;” title=”Bankruptcy Questions” src=”https://www.duncanlawonline.com/wp-content/uploads/2010/10/Question-Mark-Man-300×300.jpg” alt=”Bankruptcy Questions” width=”210″ height=”210″ data-mce-src=”https://www.duncanlawonline.com/wp-content/uploads/2010/10/Question-Mark-Man-300×300.jpg” data-mce-style=”border-style: initial; border-color: initial;” />First, let’s discuss whether your Chapter 13 payment will increase during your bankruptcy. The <a title=”Who is the Bankruptcy Trustee?” href=”https://www.duncanlawonline.com/bankruptcy-trustee/” target=”_self” data-mce-href=”https://www.duncanlawonline.com/bankruptcy-trustee/”>bankruptcy Trustee</a> has the ability to examine your pay stubs, bank statements, and tax returns at any time during your bankruptcy. Usually, the Trustee will do a review of your case annually. If, for example, you receive a major pay increase during your bankruptcy, the Trustee may increase your plan payments to reflect your new income. Sometimes, your Chapter 13 payment is arbitrarily increased by the Trustee to ensure that enough money is being paid for the Trustee to pay all of your secured debts (house, car, furniture, etc).<br />Now let’s discuss whether your Chapter 13 payment will decrease during your bankruptcy. If your pay decreases significantly, it is sometimes possible to file a motion with the court to modify your plan payments. Your attorney will be able to discuss your options with you if you suffer a job loss or a major pay decrease. Whether a plan payment can be decreased depends on the specific facts of the case – for example, how much debt is owed, how much is owed to secured creditors, how much is owed in taxes, etc.The bottom line is that you are usually not locked into your Chapter 13 payment – if your income significantly increases or decreases, there is a chance that your Chapter 13 payment can or will be modified to reflect the change in income. However, you will need to speak with your bankruptcy attorney about the specifics of your case.</p>
Key Takeaways
- Chapter 13 plans in North Carolina run 36 to 60 months, and your payment can be modified at any point during that period if your financial situation changes significantly.
- The bankruptcy trustee reviews your pay stubs, bank statements, and tax returns — often annually — and can move to increase your plan payment if your income rises.
- If you lose your job or take a major pay cut, your attorney can file a motion to modify your plan and reduce your monthly payment, but approval depends on the specific debts in your case.
- Above-median income filers are required to commit to a full 60-month plan unless they can repay 100% of unsecured debt sooner — so income increases have real consequences for this group.
- You are not locked into your original Chapter 13 payment forever, but any modification — up or down — requires court involvement and is not automatic.
- Never wait to tell your attorney about a major income change; acting quickly gives you the best chance of a plan modification before the trustee acts first.
Attorney Insight
The mistake I see most often is clients waiting months to tell us about a major income change — a raise, a new job, or a layoff — because they assume the plan is set in stone. In North Carolina, the trustees routinely pull tax returns and pay stubs on an annual basis, and if they spot a significant income increase before you've reported it, they'll initiate the modification themselves, which puts you in a reactive position instead of a proactive one. On the flip side, if you've lost a job and you call us right away, we almost always have options to file a motion and restructure the plan before you fall behind on payments. A missed payment in Chapter 13 can trigger a dismissal motion — and once a case is dismissed, getting back in front of a judge takes time you may not have.
