In a Chapter 13 personal reorganization, you have an ongoing plan payment which usually is made whenever you receive a paycheck. This payment is determined by a number of factors, the primary one being your disposable income. The payment can also be determined by the amount of debt you owe and the type of debt you owe. During the course of your plan, your payments can change. However, if you hire an experienced attorney and properly disclose your income,assets, and amount owed to creditors, it will be a small change, if any.
Unsure of Debt to Creditors
One instance in which your payment may change is upon confirmation. At the beginning of your case, a Proposed Chapter 13 Plan is filed. If you properly disclosed the required information to your attorney, the Court may confirm your plan as filed. However, if you were not sure how much was owed to creditors being paid through your plan, the payment may increase at this time. For example: if you believed that you only owed $15,000 for your vehicle, but in reality owed $20,000, your plan payment will probably increase upon confirmation once this amount is corrected.
Change in Income
Another reason your plan may increase or decrease is due to change in income. If you are not paying your unsecured creditors in full through your plan and you receive a substantial raise at work, your plan payment may increase if your disposable income increases. On a similar note, if your income decreases, you may be able to decrease your monthly payment as well. It is imperative that you keep your attorney informed of any changes in your income during your case. Keep in mind that your plan will not increase to an amount that you cannot afford.
Change in Escrow
Your plan payment may also change due to a change in your escrow payment. This, of course, would only happen if you are paying your mortgage through your chapter 13 plan and said mortgage payment includes escrow. Should your escrow payment increase, your plan payments may increase as well.
While there are some circumstances in which a change in payment is unavoidable, one way to ensure that you know what you will pay from the start is to have an experienced attorney handle your case. The attorneys at our firm can offer just that. If you find yourself in need of debt relief, please contact our office nearest you and set up a free consultation with one of our attorneys.