Need some wisdom! Questions about CH13

I’ve been entertaining the idea of filing Chapter 13 for a few months, I’ve learned some things, but I have a lot of questions still.

My wife was laid off yesterday which has motivated me to go ahead and get the ball rolling so to speak.

Her job loss has complicated things however. My main concern is that after her loss of income the ‘plan’ is all messed up. Without her income I have negative income, much less disposable. She will be collecting unemployment benefits within the next month or so and looking for a job ASAP.

I’ve been told that unemployment is not considered income when filing Chapter 13 (correct me if I’m wrong of course)

I also understand that since we are under the median income level for our household that we do not need to determine our disposable income by the complicated means test. (again, correct me if I am wrong)

My question is, how then do we calculate our disposable income?

Lord willing, she will be employed again soon, but I want to file this thing yesterday so my creditors don’t get heated. We are actually up to date with all our creditors, but the prospects of Chapter 13 and how it would affect our lives is very appealing. We currently have no money to do anything but eat and pay our debt and we would like to see a little freedom in our finances to get the oil changed, get a haircut, or buy a book once in a while.

I want to do a 100% payback as well somehow and I have a moral commitment to paying our creditors, so this being said please offer some wisdom on what I should do. Based on my understanding and filing out the Schedule I, J and 22C forms we would qualify for a 3 year plan with the minimum payment at $150-200/month.

I was hoping to establish that plan and then eventually begin to pay more towards it and end up doing a 100% payback, my question is: would/could a trustee help us arrange the payback after my plan is up?

Thanks!

We live in Virginia by the way!

I do not know if unemployment is figured in but I believe it is. It is to your advantage to have your wife collect her unemployment and not be in such a big hurry to find another job until after you have filed. For her lack of income to count, you need to get past that 6 month look back period. But if you are under the median why not file a chapter 7 and move on. You can always pay whomever you want after your discharge (although it won't change your creditors view point of you one iota. Once you file you will be toast in their book, even if you pay it back.)

All of us feel badly that we cant pay back what we thought we could but life happens and sometimes it just isn't prudent to get hung up over the ethics. Make your decision based on what is best for your family and move forward and don't look back.

Thank you for responding,

I'm not so much concerned with being loved my creditors or ever being issued credit again. Honestly, I just want my debt gone and be the one who pays it. I was hoping Chapter 13 would allow me to do this under better terms. I made some poor decisions and got myself involved in absurd interest rates. I was a victim of predatory lending, bu I signed on the dotted line.

I was hoping to find peace in paying these people off and see some fruit of my labor in the meantime instead of paying more to interest than to debt each month.

Any other comments are welcome!

My main question at the moment is that after filling our the 22C form (my wife was employed during each of the six months continuously) we are being told that our DMI is not determined under § 1325(b)(3)

That begs the questuion: What then determines it?

That is my question! It seems like Schedules I and J would determine it, but what am I missing?

Thanks again!

Wanting to pay back your creditors by filing a 13 is admirable, but may not be possible.

To file a Ch 13, your Means Test and Schedules must show sufficient disposable income to support a Ch 13 plan. Your creditors must get at least as much as they would receive if you filed Ch 7 as well.

With your wife's job loss, this complicates things because you must include yours and her income from all sources for the last six calendar months before you file. Here's a list of every type of income that must be included in the Means Test calculation regardless of whether you file a 13 or a 7:

- salary, wages, commissions, bonuses
- gross income from a business
- regular payments to you or to your dependents
- workers’ compensation insurance
- state disability insurance
- rent, leases
- retirement income (except Social Security and in some cases, disability)
- windfall payments e.g. lottery winnings
- unemployment compensation


The worst thing you could do is try to file a 13 based on her prior income and then she can't find a job at the same income level right away or can't find a job at all. Then you would be committed to a monthly payment you can't possibly make.....a near-guarantee your 13 would be dismissed by the trustee eventually for non-payment.

If you haven't done so already, it's time to set up 3-4 free initial appointments with experienced bankruptcy lawyers in your area. That's the best way to figure out what your best options are under the circumstances.

One thing I know the lawyers will tell you is to *not* file a Ch 13 right after your wife's layoff. Best to wait at least a few months to see if she finds another job that will allow you to file the 13 you want.

You mentioned wanting to pay back 100%. Whether that will happen depends on how much disposable income your Means Test and Schedules show against how many of your creditors file claims to be paid back within your plan. Most 13ers pay back less (sometimes far less) than 100% to their unsecured creditors.

As far as the Means Test goes, the only time you don't have to complete the whole Means Test is if you are filing Ch 7 (forms 22A) and the first portion shows you make less than your state's median income. When you file a 13, because you MUST show sufficient disposable income to fund a plan for at least 3 years, your attorney will complete the Means Test and Schedules to see how much disposable income you have. If your Means Test and Schedules don't show at least $100-150/month of disposable income, then you cannot file a Ch 13. You'll have to file a 7.

Thanks for the reply!

My wife has not received the first dollar of unemployment yet, but it will start soon hopefully.

As of now, the past 6 months has us making plenty to pass a means test, but the current reality is that yes we do have DMI once her unemployment starts, but not nearly the amount that we would have had even one month ago, so how would that work out?

Can we file because we pass the means test when looking back 6 months but set up a plan based on our current situation ?

Thanks again

Keezeed, please visit the links below and read.

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

http://www.debthelper.com/bkhelper/(nmb4v0vku1fs5cvs2yj4ftz5)/bkchapter13.aspx

i live in illinois and they counted my un imployment as income

i live in illinois and they counted my un imployment as income

As it should be, the code requires that you do unless you contest that you are receiving the unemployment as part of the social security act.