Filing for Chapter 13 bankruptcy can give you a new lease on life after all of the court’s requirements are met. This often includes a commitment from you to provide the court with all disposable income during the first 36 months of your court-approved debt repayment plan. Trustees here in Florida and elsewhere often require this contribution in the majority of cases — especially in the beginning — even though it is not an express requirement.
Three years is a long time, and you might expect to receive a raise in income at some point during that period. What happens to that raise? Disposable income is defined as the amount of income left over after all reasonable expenses are paid. If you get a raise, the amount of disposable income could increase.
You might be able to keep that increase so long as it is not a significant amount. Even if it is a significant amount, a corresponding increase in expenses could nullify the need for the court to adjust your payments. If your plan lasts longer than three years, the Bankruptcy Code — which applies here in Florida just as it does across the country — does not require a contribution of disposable income. Depending on your situation, adding any salary increase to your disposable income requirement could shorten your plan. This could mean an earlier discharge.
In any case, all of the circumstances will need to be taken into consideration before a decision is made. Once your debt repayment plan is complete, you will have a clean slate upon which to rebuild your financial life. Your income — and any raises — will be your own.