What are the Effects of a Salary Increase on a Wage-Earner Plan Under Chapter 13?
When a Chapter 13 debtor enters into a wage-earner plan, he or she commits the next three to five years’ disposable income — that portion of the debtor’s income not required to meet the necessary needs of the debtor and his or her dependents — to the repayment of debt. Often, a debtor’s income will increase after the plan is in place, and the question arises as to what becomes of this increase in income. It seems only fair that if the payment plan does not project paying debts in full and more income than was planned for is actually realized that the extra money should go to the creditors, and not be retained by the debtor. In fact, courts often subscribe to this view that the debtor should not be unjustly enriched to the detriment of creditors. However, the debtor may be allowed to retain the increase in income unless the increase is significant and there are no offsetting increases in expenses. Plan modifications may be requested in a court motion by the trustee, by an unsecured cred
