Marriage During Chapter 13 Bankruptcy: New Expenses and Income
Increasing Household Income by Adding Another Person
In a Chapter 13 bankruptcy, you must commit all of your available household income to your Chapter 13 payment plan. What happens if your household increases, and the income increases along with it, because you married during your Chapter 13 plan? As a bottom-line rule, changes that occur in your income and expenses throughout your Chapter 13 bankruptcy case can potentially alter the monthly Chapter 13 plan payment that you are making. That Chapter 13 bankruptcy plan payment is, essentially, the amount of your available "net" monthly average income. If you have $2000 in monthly take-home pay and you have $1800 in monthly household expenses, your plan payment should be approximately $200 per month. If your income or your expenses changes for any reason in a Chapter 13, that plan payment may change as well. Even if the reason that your total household income has changed is because you married and added your new spouse and their income to your household.
Add The New Spouse's Expenses, Too!
The good news is that, in addition to adding your new spouse's income, you are also adding your new spouse's expenses. With the addition of a new person to your household, you are at least doubling clothing, food, medical, and other basic expenses, not to mention your new spouse's own personal expenses, which cannot be required to fund your Chapter 13 debt repayment. But a change may occur, either increasing or decreasing your plan payment amount, so it is important that you maintain contact with your bankruptcy attorney so that he or she may work with you to recalculate and your income and expense bankruptcy petition schedules and file a motion to modify your Chapter 13 bankruptcy plan if needed.
Married While in Chapter 13 Bankruptcy: The Bottom-Line
As a practical matter, the Chapter 13 bankruptcy Trustee who is administrating your case may not require a modification so long as your payment is rolling in each month as agreed when your plan was confirmed and approved by the court, but, if a modification is required, it is better to do it proactively with your attorney's help than to do it defensively as a result of a motion to modify or even dismiss your case due to bad faith in not disclosing the change in household circumstances filed by the Trustee. A Chapter 13 bankruptcy is, however, essentially a flexible system in which household changes can usually be accommodated one way or another. Keeping a good line of communication with your attorney about what is going on in your household is vital. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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