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What happens to the chapter 13 payment if you get a job w/in the payment period?

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  • What happens to the chapter 13 payment if you get a job w/in the payment period?

    i lost a job, have unsecured debt, but got a pension; am under the median now with some 8-10k unprotected assets ; am looking for work and havent found work yet. I assume I will get work, and hence more monthly DMI sometime w/in the payment period of the ch13. What impact wd this have on the payment , if any?

    When I asked this to attnys they say that by law if you have additional money , you have to send the taxes to the ch13 trustee. But every attny I spoke w/ said w/in our district , north IL / chicago , they have not seen a trustee make a motion to amend the payment from new income. It is possble that they were not qualifying this stmt w/ proper parameters. sounds too 'absolute'. what is your experience / knowledge on this ?

    further,

    I just got a call from a prospective employer and I havent filed ch13 yet. If I get a job now, before filing, how is that handled in the ch13 payment plan? How do they assess / determinew what your monthly income is? Assuming I get this job , but dont start working or getting a payck before the confirmation dt, wd I say I have this job making X when I did not even get $ ? wd a plan be based on this new job or what?

    I believe that they look back 6 mos to determine income, right? since this job can go bust theoretically in a few mos?.

  • #2
    Originally posted by rayrod View Post
    i lost a job, have unsecured debt, but got a pension; am under the median now with some 8-10k unprotected assets ; am looking for work and havent found work yet. I assume I will get work, and hence more monthly DMI sometime w/in the payment period of the ch13. What impact wd this have on the payment , if any?
    If your income increases "significantly" during the life of your Chapter 13 Plan of Reorganization, then you are subject to a modification of yoru confirmed plan. That modification could include an increase to your monthly payment based on a newly cacluated disposable monthly income (DMI) calcuation.

    Originally posted by rayrod View Post
    When I asked this to attnys they say that by law if you have additional money , you have to send the taxes to the ch13 trustee. But every attny I spoke w/ said w/in our district , north IL / chicago , they have not seen a trustee make a motion to amend the payment from new income. It is possble that they were not qualifying this stmt w/ proper parameters. sounds too 'absolute'. what is your experience / knowledge on this ?
    Yes, it's the law. I don't know why you don't understand what your Attorney is cldearly telling you which is, simply, that's the law. Now, on the flip side, most Trustees don't care about inreases in income so long as they are not significant. Don't ask me to define significant. We use a general rule of thumb that "significant" means more than 10% (and don't hold me to that). It is totally at the discretion of the Trustee. In a recent report, a Kansas Trustee noted that only about 10% of all Chapter 13 cases (that make it to discharge) have had an increase in their payment due to a Trustee motion.

    Originally posted by rayrod View Post
    I just got a call from a prospective employer and I havent filed ch13 yet. If I get a job now, before filing, how is that handled in the ch13 payment plan? How do they assess / determinew what your monthly income is? Assuming I get this job , but dont start working or getting a payck before the confirmation dt, wd I say I have this job making X when I did not even get $ ? wd a plan be based on this new job or what?
    There is no difference in how a Chapter 13 works. A Chapter 13 is always based on "forward" looking projections (hence the phrase "projected income"). You must project that you will have a job, or your attorney will propose a "step" plan where you start at a certain lower amount and then the amount increases.

    Originally posted by rayrod View Post
    I believe that they look back 6 mos to determine income, right? since this job can go bust theoretically in a few mos?.
    Not in a Chapter 13. Chapter 13s are based on projections. You can look back at the last six months only if it clearly defines what it will look like going forward; see the Lanning decision. Chapter 13s are specifically designed to be modified through the Motion to Modify Confirmed Plan. The Congress and courts understand that life happens and Chapter 13s have the mechanism (under 1329 I believe) to modify a plan to address a variety of issues and especially changes in income and/or expenses.

    These are all questions that your attorney should have answered. If you're just trying to be reassured, then consider this to be the reality of a Chapter 13. When you're in a Chapter 13, you file your plan, get confirmed, and then keep your head down (making your payments on time and not otherwise getting in trouble).

    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      thanks for the input and the clarification on income looking forward. I assume the reason the attnys I consulted w/ always asked for the last 6 mos of paystubs is that they assumed that it will be thus going forward.

      That call I thought was a prospective employer was NOT , so I dont have the problem of a step plan. I assume that my attny wd not devise a plan when I dont have a job in hand at filing, correct - even tho I will very likely get SOME sort of job in 5 yrs.

      I don't know why you don't understand what your Attorney is cldearly telling you which is, simply, that's the law.
      --what I was not understanding was this stmt - [attny said]: 'have not seen a trustee make a motion to amend the payment from new income.' The attnys were being on the face of it inconsistent. On the one hand, they said that you are supposed to tell the trustee when you made more $ , but then they also said they have never seen a trustee try to amend the payment. It is possible that they only have seen insignificant increases ( however insignificant is defined).


      These are all questions that your attorney should have answered.
      --I do not have an attnyt yet. I am still investigating the right option. I have seen several attnys w/ the initial consultation and there have been different recommendations+. And as you might understand, I cannot go back to the attny to ask for clarification since only the first meeting is free. SO I try to get more information on the terms being said.

      +
      a) some have said try a ch7 and then if they seek to seize assets, convert [ I put this recommendation to this forum in another thread]
      b) some came up w/ less unprotected equity than others since they used different methods [so which one (attny / method is correct? I ask myself] . the one who came up w/ the least unprotected equity is retiring in 3 yrs and so he immediately said to use a 3 yr term despite it being a more onerous amt for me to handle than 60 mos. He also is the most expensive up front, but I 'd do this if he can get me a lower payout than others.

      One thing is for certain , the longer I wait , the more likely I'll get job and then be well north of the median and I will have a higher payment from the get go.

      Comment


      • #4
        There is no inconsistency. If your income increases, you tell your attorney who will tell the trustee if required. Once the trustee is informed of an increase, it is up to the trustee to file a motion to modify the plan. If there is no motion, the plan stays the same. It sounds like at least one attorney told you the trustees in your district don't tend to file motions for modification.

        I would not hire an attorney who wanted to put me in a 3 year plan because it is convenient for his retirement. It sounds like he wants to avoid having to refer you to a new attorney and perhaps share his fee.
        LadyInTheRed is in the black!
        Filed Chap 13 April 2010. Discharged May 2015.
        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

        Comment


        • #5
          Originally posted by rayrod View Post
          That call I thought was a prospective employer was NOT , so I dont have the problem of a step plan. I assume that my attny wd not devise a plan when I dont have a job in hand at filing, correct - even tho I will very likely get SOME sort of job in 5 yrs.
          If you have not job then the attorney can not propose a step plan. A Chapter 13 Plan can only consider things that are more than likely to happen. For example, you may start with a plan paying X, but in 5 months your car wil be paid off. Your plan may include a step-up in month 6.

          Originally posted by rayrod View Post
          --what I was not understanding was this stmt - [attny said]: 'have not seen a trustee make a motion to amend the payment from new income.' The attnys were being on the face of it inconsistent. On the one hand, they said that you are supposed to tell the trustee when you made more $ , but then they also said they have never seen a trustee try to amend the payment. It is possible that they only have seen insignificant increases ( however insignificant is defined).
          I defer to what LadyInTheRed has already written. The Attorney is smoothing things over for you so that you won't panic. The law is the law, but most Trustees are "cool" and they're not out trying to squeeze every dime from you (although, at times, it will feel like that).


          Originally posted by rayrod View Post
          a) some have said try a ch7 and then if they seek to seize assets, convert [ I put this recommendation to this forum in another thread]
          You are not entitled to conversion. If the Trustee thinks that you've committed a fraud or the best interest of the creditors is that you liquidate in a Chapter 7 then they would fight your conversion. Even though I just wrote that, most people can convert to a Chapter 7 when the Trustee seeks to dismiss because the case is an abuse (abuse is not fraud).

          Originally posted by rayrod View Post
          b) some came up w/ less unprotected equity than others since they used different methods [so which one (attny / method is correct? I ask myself]
          That's like asking which appraiser is correct. They may all be correct; they may all be wrong. Until you're in front of a Trustee, it's black magic. It's a combination of experience, depth of review, and luck of the draw (which Trustee you draw). Unless and until you have retained an attorney and they have gone through everything with a fine toothed comb, these are only estimates!


          Last edited by justbroke; 09-20-2017, 01:27 PM.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


          • #6
            rayrod, since you seem to be at a low point in income, I suggest you choose the attorney with whom you are more comfortable and move forward. You are not going to have definitive answers to every question because there are just too many variables. Keep in mind that what an attorney recommends during a free consult, may change after they have gathered complete information from you. What you want is an attorney who will clearly explaining your options and the relative risks and be a strong advocate for you and not just roll over for the trustee if there is an objection to a Chap 7 discharge or a to Chap 13 plan.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment

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