What Happens If My Income Changes During My Bankruptcy?

Any changes in income have to be disclosed to the court, usually by amending your bankruptcy petition, as soon as possible. In Chapter 7, a change in income will only impact your case if there is a significant increase in your income. Depending on the size of the increase in income and the timing of the change, you may be required to convert your case from a Chapter 7 to a Chapter 13. A decrease in income will not have such an impact, as obviously having less income does not increase your ability to repay your creditors.

In Chapter 13, however, any change in income could have a substantial impact on your case. You will likely have to modify both your budget and your Chapter 13 repayment plan to reflect the changes in your income. A significant decrease in income may make your Chapter 13 case unfeasible, as you will no longer be able to afford even the minimum required payment. It may also allow you to convert your case to a Chapter 7, even if you were not eligible for a Chapter 7 before you filed the Chapter 13 case. A significant increase in your income may require that you increase your Chapter 13 plan payment and the distribution to creditors under your plan. The most important thing you can do is to report the change in income to your attorney as early as possible to allow your attorney to analyze the impact that it will have on your case and provide options to you.

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