Three Reasons Your Bankruptcy Payments Increased

If you file for Chapter 13 bankruptcy, the court will expect you to make regular bankruptcy payments to the trustee for a 3 to 5 year period. The trustee uses your payments to pay off as many of your creditors as possible. In some cases, your circumstances may result in your bankruptcy payments increasing over time.

Your Income Increased

Each year you must provide your bankruptcy trustee with a copy of your most recent tax return. If the trustee notes a significant income increase from the previous year, he may raise your bankruptcy payments. The court wants to ensure that you are using as much of your disposable income as possible to repay your debts.

You Missed Previous Payments

If you miss payments to the bankruptcy trustee, you must make up the missed payments to avoid having your case dismissed. Depending on your circumstances, the trustee may opt to add your missed payments in with future payments. This will result in higher bankruptcy payments until you repay the amount you missed.

A Creditor Requested a Payment Increase

Section 1329 of the U.S. Bankruptcy Code allows unsecured creditors to request an increase in Chapter 13 payments from a debtor. Even if your bankruptcy repayment plan has already been confirmed, if a creditor can present a valid reason why your plan should be modified, the court may grant its request. This will almost certainly result in your bankruptcy payments increasing.

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