Payment Plan

[newstart]

As I stated in a previous post a friend of mine has filed chapter 13. My question is how do they come up with a persons payment plan? My friends payment is $461.00 a week for 3 years. I told my friend that is to much per week considering my friend has no discipline when it comes to paying bills. This is how they ended up with this problem in the first place. He will never be able to stick to this plan can the amount be down sized?

[bkfiler]

the payment plan is based on how much disposable income you have. they take it and pay the creditors after sliptting it up. the total amount can be all the way up to the total amount owed. but usually is a much reduced amount base don a 3 or 5 year plan.

if he doesnt make the payments at anytime then it can and will be dismissed and all the time, money and effort lost. it happens all the time.

[Minnymouth]

$461.00 per week is an extremely high payment in a Chapter 13..... Your friend must have an excellent income for his payments to be set so high........
They still leave him living expenses and he is expected to adjust his standard of living as such......

[newstart]

I think his problem is he has a vehicle that he is paying for that is not in his name so I am sure that was not included in the payment and made it appear that he had more disposable income.

You know the old saying it is not how much you make it is what you do with it. He may have a good income but he does not apply it to anything but splurging.

[StaciMM]

He needs to discuss w/ his attorney, to make sure ALL his expenses are being considered. If he is paying for someone else's car, you're correct in that he will not be able to keep doing so. If he is using the car, and financed it in someone else's name, he may be able to prove that he is paying for it and get his plan adjusted. (It would need to be the only vehicle that he is paying for/maintaining, most likely.)

[newstart]

According to him he make $45K, has 2 kids, house, and paying child support, owes the IRS, I also expressed my concern that this payment plan was too high and he is not the most disciplined person when it comes to paying bills. But this is his MO, he always makes arrangements on bills for unreasonable amounts, so I am not surprised by this. He will not be able to maintain this and will end up losing his house. I guess if he doesn't feel it is unreasonable I just need to leave it alone.

[StaciMM]

Is there another income in the household-or just his? That payment might include his mortgage payment-sometimes the arrearage & regular payment are made thru the plan. If that is the case, the high payment makes sense as a mortgage is normally your largest bill each month.

[newstart]

It's only his income. He has decided the payment plan is too high and wants to dismiss the 13, what can he do? He said he spoke to his attorney and the attorney explained that he would still be responsible for his child support payment. That would mean he would be paying out $661.00 a week. His attorney said he based his payment plan on overtime and a second neither of which he has right now.

[newstart]

Also, if he cancels the 13 I believe he will lose his house. It was in foreclosure that was the whole reason he filed. He thinks he will cancel the 13 and then sale the house but I told him according to his papers that if this is dismissed or payments are not made on time that they will immediately excelarate the foreclosure process and seize the home, giving him no time to sell. am I right?

[StaciMM]

I don't know how long the foreclosure process takes-but one concern I'd have is he won't be able to get a fair price for it if it is in foreclosure. Anyone interested would KNOW its in foreclosure, and I'm guessing they would wait and bid at a foreclosure auction-expecting to get a better price that way.

[newstart]

Staci you are right because that's what I would do if I knew it was in foreclosure. Considering at this point he is 4 months behind I know he can't catch up in order to sell it.

[StaciMM]

Step 1-he needs to really sit down and analyze his finances. Can he afford to stay in the house with a reasonable ch. 13, or is ch. 7 an option (if he gives up on the house)...

If he stops paying the 13, it will take a little time to start the foreclosure, etc. He can start saving money to rent a place. At that point, he will REALLY need to get a good plan in place. If he is not able to handle his own finances, is there someone he trusts that would be willing to help oversee things?

[newstart]

I don't think he even looked into the option of chp 7 because he wanted to keep that house. If he doesn't have the house he may not need to file bk. He tried to let a trusted person handle his finances but he wasn't disciplined enough to just allow the person to handle it the way they seen fit and when he became upset he made it clear that he didn't want them handling his bills and put an end to it. He might benefit from a psychologist because I really believe he has a serious problem handling finances, he has no desire to pay bills.

[Minnymouth]

A man with "no desire to pay bills" and trying to pay child support and keep a residence..............needs a little counseling along the way.

He has his priorites confused - its BILLS FIRST - PLAY LATER - if anything is left over.....

Maybe your friend needs to grow-up a little............

[newstart]

Minny,

He does need to grow up. He needs to get his life into perspective and realize that nothing is free so this experience may just be the wake up call he needs to get his persona and financial life together.