The typical repayment period for a Chapter 13 Bankruptcy case lasts three to five years. Three to five years is a substantial window of time for “case-influential circumstances” to occur, or in other words, life happens. Some of the most common case-influential circumstances to occur during a Chapter 13 Bankruptcy include: receiving a raise, being fired, and/or getting married. Because all of these situations affect income in one way or another, they in turn, after being reported, affect your bankruptcy case.
Let’s start with the scenario of receiving a raise. You’re a year or two into your Chapter 13 Bankruptcy when all of a sudden, your boss calls you into his office and says let’s give you a raise. This is exciting news but unfortunately, it is news that may increase your payments to your creditors. So maybe you think the raise isn’t that significant to report, or maybe the raise is that significant but you don’t want to report it because it might result in an increased repayment plan. But let me stop you right there. A delay or failure to report a pay raise will seriously jeopardize your Chapter 13 Bankruptcy case. Trust me, it will not be worth chancing that. This is why the first thing you must always do when there is a change to your income during a Chapter 13 Bankruptcy is report it to either your bankruptcy attorney or to the bankruptcy trustee for your case. Following your report, your current repayment plan and your new financial situation will be assessed to determine if a change in the payment amount needs to occur. To provide you with a brief insight into the evaluation process that occurs, the raise you receive will only increase your payments if it is deemed as disposable income.
The next scenario you might come across while in Chapter 13 Bankruptcy is the unfortunate circumstance of being fired. If you are fired during your Chapter 13 Bankruptcy case you may be able to receive a hardship discharge. Receiving a hardship discharge would release you from any further duty to pay off your debts. However, in order for you situation to even be considered for a hardship discharge there are four conditions that must be fulfilled. First the loss of job must be of no fault of your own. In other words, you have to be truly fired; you can’t just quit and call it a day. Second, it must be a permanent state. In other words, there must be something that is permanently disabling you from finding another job. Third, you must have already paid the creditors a certain amount of money. In other words, you’re not going to get off the chain after just three month of payments. A typical standard to determine if you’ve paid your dues is if you’ve already you’re your creditors more than, or equal to, the amount you would owe in a Chapter 7 Bankruptcy. The fourth and final condition for a hardship discharge is that you must have tried, despite your circumstance, to modify your repayment plan in a way that would allow you to continue to be in Chapter 7 Bankruptcy. If you have done this but to no avail, and you have fulfilled the other three conditions then you can qualify for a hardship discharge after being fired.
The final scenario that often comes up during a Chapter 13 Bankruptcy is marriage. It is important to note that getting married while in Chapter 13 Bankruptcy will almost always affect your repayment plan. This is because marriage changes the number of people living in a household (which affects expenses) and it also changes the amount of income coming in (providing your new spouse also has a job). Therefore, based on the circumstances surrounding the marriage, you may either see an increase or a decrease in your repayment plan. For instance, if your spouse is not working and brings two children into the marriage (which means you move into a bigger, more expensive apartment to accommodate for space) you might see a reduction in your repayment plan if you report your marriage and work with your attorney to petition for one. However, let’s say that you get married, there are no kids involved, and your spouse is making double what you make, it is probably safe to assume that after you report the circumstances surrounding the marriage you will see an increase in your repayment plan.
This short list of “case-influential circumstances” that can occur while in Chapter 13 Bankruptcy, is just that, short. As previously mentioned, three to five years is a large window of time for circumstances, beyond the ones listed, to arise that affect your Bankruptcy case. Instead of becoming overwhelmed with all the possibilities, hire a qualified and experienced bankruptcy attorney to help you navigate through the complexity of a Chapter 13 Bankruptcy case. Call Roy & Associates, P.A. today at 561-729-0095.
The article above is intended for educational purposes only and should not be considered legal advice. If you need legal advice, contact an attorney.