Sometimes a chapter 13 repayment plan in a New Jersey bankruptcy crashes and burns. Unexpected expenses derail plan payments, a drop in income due to disability or loss of bonuses or overtime, or you lose your job. This can lead to an unaffordable plan payment to save a house or the outright conversion of a case to a chapter 7 liquidation. Not good news!
But sometimes the news is good: Your unemployed spouse gets a job or you get a raise or a promotion to a higher paying position. When this happens, my clients will ask me, what do I do? My answer is always the same: Celebrate! Hey, you got a raise, promotion, whatever! Go out to dinner or have some other special occasion! This is good news? But then the question comes:
What will this do to my chapter 13 repayment plan?
The answer can depend, but it should never be a reason to decline a job, raise, or promotion. Hopefully that change in fortune will last well past the end of your plan, and your life will get better as a result.
If your plan already pays creditors 100%, then your plan will not change (although you may choose to pay it off sooner with larger payments from your increased household income). If it does not, then the trustee may require you to file a modified plan with higher payments.
But this is only where the plan requires annual updates on income and expenses (in other words, where you are required to TELL the court and the trustee about the good news). Finally, if disclosure is not required, then enjoy the nicer lifestyle that that income provides (or save for retirement, kids' education, etc.)
The bottom line is, you should not let good financial news like this get tarnished over worry about your bankruptcy. If you are already in bankruptcy, discuss it with your attorney. If you are not, don't let the possibility of goof news keep you from filing. It may still be the best thing for you.
So What Should I Do?
If you live in the Woodbury, Gloucester County area, or anywhere in South Jersey, and you are thinking about bankruptcy, feel free to call me at 856-432-4113 or contact me through this site to schedule an appointment.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.