Will My Chapter 13 Plan Payment Increase If I Work Any Extra Hours?

by Karen Oakes, Esq.

September 1, 2008

Folks in Chapter 13 are on a payment plan based on their income and their expenses. A Chapter 13 plan can pay unsecured creditors anywhere from 0% to 100% of the debt after secured creditors and priority creditors are paid. The percentage paid is dependent entirely on the individual debtor’s income, expenses, secured debt, priority debt, and along with local Bankruptcy Court rules and payment of the Chapter 13 Trustee’s percentage (along with attorney fees).

So what happens if the planned income is no longer the same? What happens if a debtor works five hours of overtime once a month? What happens if the debtor gets a raise? Does the plan payment go up automatically?

Whether the plan payment goes up, is dependent on your court’s local rules. If the increase is more than 10% of the regular wages (so, a debtor usually making $2000 a month makes $2200 now), and that income is going to be regular and continuing, then the payment should be changed to reflect the new income. If the income is this month and not going to continue, then the payment should stay the same.  The first thing a debtor should do when his/her income has increased (or decreased) is talk to their attorney to advise the attorney of the change in circumstances.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.

Last modified: October 22, 2012