Debt & Bankruptcy: Monthly Bankruptcy Payments Can Grow
By Janet Peterson on April 14, 2010, 6:33 am Posted in Economy NewsAs the housing market and economy in general struggle to get back on track in America, millions continue to face a tough uphill financial battle. Thousands have lost their homes after mortgage rates skyrocketed while others lost their job, making it impossible to keep up with mortgage payments. For many, owning a home was the American dream and now they find their dream under attack from many sides and as such have chosen to file for bankruptcy in an attempt to prevent the loss of their home. Before filing for bankruptcy though, those in debt need to be aware that bankruptcy payment plans can change, leaving someone struggling just as much as they were before filing for bankruptcy protection.
The Start Of The Process
When a debtor files for bankruptcy protection in a bid to keep their home, they need to be aware of the process and the problems that could arise in order to successfully navigate their way through the payments. A trustee will be assigned to their case and all of the creditors will be grouped into one large pool. When a payment plan is developed, payments will be made to the trustee who will determine how to distribute the funds. Upon filing for bankruptcy, a snapshot of the debtor’s finances will be taken but it can adjust overtime. Knowing how a payment plan can change will help a debtor ensure that the payments always reflect their current financial status.
What Can Change The Payments
The trustee will have a snapshot of a debtor’s current financial situation right away, setting up an initial payment plan. As time goes along though the trustee will receive updated information in order to reassess the debtor’s payment amounts. Things like overtime pay at work, car payments, retirement loans, and child care/support can actually lead to increased during bankruptcy. If the trustee sees that a debtor worked a lot of overtime during a six month period, this could increase the payment to creditors because more money was coming into the debtor. Overtime can be inconsistent however and not accurately reflect an increased flow of income. If a debtor has a car payment that ends during the bankruptcy, a trustee would assume that extra money no longer going toward a car payment can be used to repay debts. Likewise, having other payments such as child support, spousal support, child care, or repayment of other loans end during a bankruptcy can lead a trustee to feel a debtor now has more money to pay back to creditors, increasing their repayment amounts.
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