Will A New Job Kill My Chapter 13 Plan?

10 Jun Will A New Job Kill My Chapter 13 Plan?

trapped in amber

Are you trapped in a Chapter 13 like this insect in amber?

Frozen in time and place til the end of the plan?

The worried client called me, full of anxiety.

I’ve got this business opportunity that might net me $15,000. Wi

Should I take it or will it screw up my Chapter 13 case?

Not a hard question for me at all: Take the opportunity.

Thirteen in perspective

Chapter 13 is just a brief speck of time in a working life.

It is penny wise and pound foolish to turn down a new job or a business opportunity because of your Chapter 13 plan.

The benefits of a new job, a promotion, a business gig may last a lifetime or be the vital step to something better that improves your working life far beyond the Chapter 13.

Don’t reject an long term opportunity because of the short term issues. A successful Chapter 13 case doesn’t require that everything stay the same in your financial life.

Thirteen expects that things change.

How it works

So, you take the new job at a higher salary.

The worst that can happen is that you might have to share some of the increased income with creditors til the plan is over.

But, in many districts, the trustees make no effort to monitor your income during the plan.

The trustee doesn’t get to confiscate any additional income you might earn without due process. The trustee must move the court for a modification to your plan, increasing your payments. You get to be heard on that motion.

Perhaps your actual expenses have changed and some of that increased income is needed for your family’s support. You and your attorney can make the pitch to the judge that you should keep all of the increased earnings.

Meanwhile, the clock on the duration of your chapter 13 is ticking. Every month that you make the original payment is a month you can put more money in your pocket. It leaves fewer months to pay at a higher rate if the court requires it.

In 20 years of doing lots of Chapter 13’s in Northern California, I have had the trustee move to increase my client’s payments to the plan just twice.

It’s not that way in every district. Chapter 13 practice is exceedingly local.

Ask your attorney what the local practice is where you expect to file.

The big picture

Take the opportunity not only to reorganize and resolve your debts but to put your working life on a forward facing track.

Chapter 13 is, after all, a rehabilitation chapter of the Bankruptcy Code.

Good luck with the new job.

Image licensed byAnders L. Damgaardunder Creative Commons license 3.0.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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