Will I be penalized if my income has increased during Bankruptcy?

Question

I filed Chapter 13 in 10/04. Since then my income has nearly doubled. I want to increase my monthly payments to end my Chapter 13 sooner than the 5 years I have. I am curently paying 1% of secured debt. Will that increase? What if I sell my house, will the 1% increase then?

Answer 1

It depends on what your definition of 'penalized' is. Will you end up paying more to unsecured creditors (I'm pretty sure that's what you mean)? Yes you will. I'm not sure if you consider that a penalty.

Consult your attorney first but...you can contact the trustee of your case and tell them that you would like to increase your payments. They may ask your attorney to draw up a new chapter 13 plan, or you can simply pay the trustee more every month (you can probably just send a check, contact them to make sure). If you sell your home, they'll want you to pay off your mortgage first then whatever is left will probably get divided up among other creditors (less your exemptions).