The effect of getting a raise after filing for bankruptcy
In some Florida bankruptcies, the debtor will receive a pay raise during the pendency of the case. Whether or not a portion of that amount will go to the bankruptcy trustee depends on the type of bankruptcy the debtor has filed.
In a Chapter 7 bankruptcy, the debtor’s non-exempt assets at the time the petition is filed will be liquidated and surrendered to the trustee. None of the debtor’s property that is amassed after the filing date are considered to be a part of the bankruptcy estate. This means that the pay raise will be the debtor’s to keep.
Under Chapter 13 bankruptcy, the debtor is required to make payments under a court-approved plan over a period of five years. The amount of the monthly payment is generally equal to the debtor’s disposable income. This would mean that the trustee could file a motion requesting the court to increase the debtor’s payment amount after learning about the raise. The same is true if the debtor wins the lottery, receives an inheritance or receives additional income from any source. The trustee will not file a motion for an increase in every case, however.
Filing for bankruptcy can help people to stop creditor harassment. It can also provide them with an avenue for obtaining financial relief so they can restart their lives fresh. There are significant differences between the two primary forms of consumer bankruptcy, and not every person can qualify. An lawyer can outline the eligibility requirements while exploring other forms of debt relief that may be more appropriate for a client’s particular set of circumstances.