Declining Income and trying to make a 13 plan

[jwbbx]

I am meeting with my attorney tomorrow to review the first cut of my plan.

My biggest fear in this whole process is that over the past 4 years my income has actually declined each year, and not by a small percentage. Since 2004, my income has dropped 17%. I believe it's stabilized in the past year, our bonus targets have been brought more into line with what we can expect for real world targets.

I should clarify - I work for a company that pays a base (below market) salary and quarterly bonuses based on Return on Net Assets. It's fairly common in my industry. However, the BASE has not been adjusting for inflation etc each year, and RONA targets have been unrealistic with market demand for the past couple of years.

30-35% bonuses were the norm a few years ago, but that time is over - they are now in the 15-22% range. My industry is part of the Automotive Supply Chain. Need I say more??

Anyway - my problem is I have to submit a budget based on TODAY, and it needs to be good for 5 years. They seem to assume that inflation will be taken care of by salary adjustments, and I just cannot count on this. Food, Fuel, Utilities - who knows where these are headed in the next 5 years. I'm not very good at crystal balling this stuff.

So, my questions are these:

1. Is there any consistent criteria for having the plan re-opened based on not new but RISING expenses?

2. Does each re-opening require a lot of paperwork and attorney work? In other words, can I expect to be paying more legal fees all through the plan? Any experience on what this type of Plan Modification costs?

3. Is there no provision for inflation adjustments? I can't find one, but maybe I have not looked in the right places.

In the current climate, putting together a budget without inflationary contingencies is frightening. It feels like 1974 to me, right before we saw massive inflation and runaway interest rates. If you're old enough to remember that maybe you can tell me if it feels that way to you too? Are you getting deja-vu? I am....

Does anyone have any real life experience with declining income or rising expenses over the course of their 13?

I'm looking for real experience here, please not the 'it should work this way' comments. Anyone who's in the Eastern District of Michigan I'd especially like to hear from!!

Thanks!

[Flamingo]

Some of your questions I have experience with during our Plan. Let me first state that during your Plan, if there is a large decrease in your income that will cause you not to be able to make Plan payments, that is the time to contact your attorney about a possible adjustment. Plans are usually not modified for usual inflationary expenses as to increases or decreases in daily living. Otherwise people would be contacting their attorneys sevearl times a year for Plan modifications. Same as for increases in income. If you get a large raise or bonus during your Plan, since that increases your disposable income, contact your attorney to see whether or not that has to be reported to your Trustee as it can mean an increase in your Plan payment to give more to your creditors. There are some people that have to report every increase income, some only over a certain percentage. Your attorney is your best source as to your particular situation. Same as to bonuses, inheritances, lottery winnings, etc.

One month after we filed, the company I worked for filed bankruptcy so I was out of a job about one month before our first hearing. I contacted my attorney who told me to find a job immediately which I did, but at $6,000 per year less. I took all that information, including my former employer filing for BK, to the hearing. Our Plan was decreased to a much lower amount but with the provision that at month 55 of our 60 month plan, we were to obtain refinancing on our house and pay off the balance due. At that time it was expected for us to have a lot of equity because we filed with a good amount of equity in the house. We bought out early due to having to have major house repairs done so we refinanced way earlier than at month 55. But our Plan was modified due to that income loss with the provision of refinancing.

It is always best to consult with one's attorney as to anything major financial-wise during your Plan because what one person has to do during a Chapter 13, the other person may not have to do. What applies in one district may not apply in another. The life experiences are the same, but those are not included in one's own Plan.

The main real life experience I can tell you that will benefit you the most during your Plan is not to be late with any Plan payments or any other payment you may have during your Plan. If you feel you cannot make a Plan payment, just don't let it lapse thinking you can catch up; contact your attorney immediately. Just remember that your funds during your Plan years are not yours; they fall under the jurisdiction of the trustee from the time you file until the time you are discharged. If you treat your Plan that way, you will not end up in any trouble whatsoever.

Plus having this forum available to you and others on here is invaluable. The forums available when we filed were horrid, loaded with trolls and idiots who gave out all sorts of incorrect information and downgrading remarks.

[rrockinggramma]

My experience has been with plan modifications that many trustee's in michigan DO NOT approve them. Now your attorney might have better luck but unless there is significant changes in income, like to none at all etc the trustee's in the Eastern District are hard pressed to give on this issue. One court case opinion that I read was about a bus driver that had paid into her plan for 3 or 4 years, found out she had cancer, couldn't work and ask for a hardship discharge. The trustee fought it all the way to the judge, who finally granted it based on the fact that this individual had worked and paid into her plan when she was able. But it took a big fight to win it. I have requested payment modifications of my previous dismissed chapter 13 and my attorney at the time (not the one I have now) said "so sad, too bad". Course we dismissed it for non payment and then I refiled. But I believe that unless you have MAJOR and I mean MAJOR issues, not just the small stuff of rising prices and small reductions in income there won't be sufficient reasons for a trustee to approve modification. At least NOT in the Eastern District of Michigan. (and remember your plan starts counting at confirmation here, not at file date )