Published in Debt Advice Features on Friday, March 30 2007

If your income changes in bankruptcy you must notify your bankruptcy trustee immediately regardless if your income has increased or decreased, there are a number of reasons why you should notify your trustee if this happens.

Increase in Salary

If you have a sudden increase in salary and you are not making payments into your bankruptcy, then you should contact the trustee who is dealing with your case, you may find that once you contact them they will ask you to complete a new income and expenditure to identify that you can afford to make payments into an IPA or IPO, you may feel that you do not want to contact them and tell them, however if you do not and the trustee finds out at a later date, then the trustee in bankruptcy has the power to ask for back payments of what you should have been paying, which could lead to you being in a difficult financial position again.

You are probably aware if you have read the other articles on this site that if you do not disclose any change in your income, this will be classed as not co-operating with the trustee which again could lead to your bankruptcy discharge date being suspended.

If your salary increases and you are making payments into an IPA or IPO, then you again must contact your bankruptcy trustee to notify them of the change, as you are already making payments the trustee may not request you to complete a new questionnaire as the administration of it could cost more than the increase payments. With that in mind you must still disclose the increase and it could be that your bankruptcy trustee will ask you to increase the payments.

Any increase in salary would or should in turn increase the surplus income or disposable income, note that your bankruptcy will only take around 50% of the disposable income.

Decrease in Salary

If you have a decrease in salary and you are not paying into an IPA or IPO then a decrease in salary will not make that much difference in terms of what you would need to pay back, however you would still be advised to notify your bankruptcy trustee as soon as possible that you have had a change in your salary. The main reason for this is that the trustee may then feel that your bankruptcy has been concluded and you could apply for early discharge on your behalf.

If your salary decreases and your making contributions into an IPA or IPO then you must notify the trustee immediately so he or she may evaluate your current position and decide whether to stop your payments or make adjustments as to the amount you are paying, at the end of the day the bankruptcy trustee would not leave you without enough money to live off.