Change of Income During Bankruptcy

A change of income during bankruptcy can be good or bad, depending.  Material changes in income frequently require plan modifications, which must be approved by the Court.

If your income falls too much you may not qualify for a Chapter 13 Plan.  It depends on the amount of your priority and secured debts, and the liquidation value of your bankruptcy estate.  Meaning, it can get technical and complicated.  However, if you didn’t qualify for a Chapter 7 originally because your income was too high, a reduction of income may suddenly mean you can convert your Chapter 13 case to a Chapter 7 case and discharge most if not all of your debt.  So, in some cases a reduction in income is good news from a bankruptcy perspective.

If your income increase, the bankruptcy trustee or creditor may file a motion to increase your plan payments.