Is A Chapter 13 Plan Years Of Suspended Animation?

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

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

Full of anxiety,  my client reported good news.

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

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 career  advancement  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.

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.

Chapter 13 practice  is exceedingly local.  Ask your attorney what the local practice is where you expect to file.

The big picture

Chapter 13 is a rehabilitation chapter of the bankruptcy code.

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

Good luck with the new job.

Image licensed by Anders L. Damgaard  under Creative Commons license 3.0.