IRS Standards and Vehicle Operation Expense

[sheilaE]

According to the IRS standards, we are allowed $472.00 for vehicle expense--it only give you the figures for only 2 cars. We have 3 cars (with 3 drivers) and our gas bill runs close to $400.00 per month. Insurance is $208.00 and then there is yearly registration for all 3. If our monthly car expenses run over the $472.00 What happens?

[momofthree]

Filed Eastern Dist. of CA. Claimed $475/mo gas/maintenance and $170/mo insurance. Trustee didn't bat an eye over it. We also had the payment of $511. The attorney that you're speaking to is full of crap. Stop listening to the bogus words coming out of his mouth and find a different attorney.

[sheilaE]

Momofthree. Do you mean you have a car payment of $511.00 or your plan payment is $511.00? Our current car payment is $388.00. It will be paid off in 1 year. The other atty wanted to put the car payment into the plan, lowering the payment to $108.00 per month, which would give more to the trustee...so I understand that part, but the payment would be for another 5 years. Either way we won't be seeing anything extra on our part. I's all about how much more can they give the trustee.

[justbroke]

This really depends on the temperament of the Trustee and your actual expenses. Typically, three vehicles are not allowed unless you can show that they produce income (e.g. a work vehicle).

You are attempting to maximize allowable expense while lowering DMI that must be paid to the creditors and through the Trustee. If the Chapter 13 Trustee sees a car payment that is going away in 1 year, they will want an increase in plan payments (whether it's a 36 month or 60 month plan). Also, notice that what you put on the Means Test (From B22C) is different than what you may put on Schedule J (expenses)! On the Means Test, you actually re-amortize the car payment over the life of the plan, thereby (in most cases) reducing the monthly payment. This is what the Means Test is meant to do; figure out what life would be like under a 60 month Chapter 13. On Schedule J, however, you put your actual expenses (with a lean towards looking forward). This is why Schedule J will look different from the Means Test. They are two different forms determining two different things.

Most Chapter 13 Trustees (and Districts) don't allow you to put any vehicle or housing expense on Schedule J if they have a loan on them. It's actually clearly printed on Form J. (Installment payments: (In chapter 11, 12, and 13 cases, do not list payments to be included in the plan" -- from Official Form 6J) This gets tricky when you're including payments outside the plan on here when the payment is going away. If you're including the car in the plan, then you would not list the payment on Schedule J. You'd actually get the higher of the payment or the IRS standard ($489) on the Means Test.

And, just because a payment is higher than the IRS standard, really doesn't matter in a Chapter 13. In a Chapter 13 you can keep assets, like other cars, so long as you do so to the satisfaction of the creditors and the Trustee. In some cases, you need to contribute the value -- which you can't exempt -- to the unsecureds over the life of the plan. That's the beauty of a Chapter 13... you can keep it all "if you can afford it," your plan remains feasible, and the creditors and Trustee either don't complain or their objections are overruled by the Court.

A Chapter 13 Plan is an intricate and delicate piece of work! You want to maximize the number of (allowable) expenses so that you still have some room to save!

If you're uncomfortable with your attorney, first try to communicate with them and have them explain things. There are different strategies which do include in plan versus out of plan payments. Most Trustees are smart enough to know when your payments are ending and WILL want you to contribute the rest as DMI to the unsecured creditors.

As for the gasoline expense, just put down what you spend. It is usually not questioned unless it is extravagant. As for whether they'll allow 3 cars... that depends, but they typically won't give you the 3rd car "allowance" but may allow the gas/tolls and other expenses for that 3rd vehicle. Too much depends on your actual Trustee and some on your attorney.

[salsa]

We also have 3 cars/drivers, and I was able to cover the car insurance for the third car, but not gas or maintenance. So we just try and pull money from elsewhere to cover the 3rd car.

[justbroke]

We also have 3 cars/drivers, and I was able to cover the car insurance for the third car, but not gas or maintenance. So we just try and pull money from elsewhere to cover the 3rd car.

This is as expected. You can keep it, but not to the detriment of the unsecured creditors.

[sheilaE]

Yes, that was what I was wondering...by having the car in the plan, is that contributing to the higher payment? Probably not that much, but I was just wondering.

Also, I don't know if you read my "In a Panic"thread, but question this pertains to that:

By being in a plan that we are not paying 100% back, do those plans not having any wiggle room at all? I understand we need to give up cable & internet plus cell phones according to 1st atty. And if my husband were to die, yes I would still receive some of his pension, but the other atty said we need to give up the life insurance. I'm not really comfortable with that. It's $167.00 per month (we are in our early 50's). He left us minimum gas money, said that now that my husband was retired, the trustee would question why we are driving around using gas..said he's no longer working and we should be staying home ...what the?

I guess my panic is that he left no cushion... he said being the kids are older. they would be leaving home within a few years (guess he has a crystal ball). Our 1 son has autism and will never leave, the other 2 are in Jr college. We interviewed another atty and received a bit of hope, but there was too much to go over in the allowed time that we had with him, so we're still in a bit of a panic. I'm thinking it's the not paying 100& back that's going to hurt us. We are willing to give up everything to make it work, but at the same time, want a livable plan and not have to go out and find side jobs that pay under the table (that was the 1st atty's advice).

[Pjmax]

SheilaE, you are interviewing other attorneys, right? (I've been following your other thread.)

Oh, I missed the part about talking to a second atty. what did he/she say about the lousy advice atty. #1 has been giving?

[sheilaE]

Hi Pjmax, he was surprised, but said he needed more time to go over our entire packet of information to see why the payment was set so high so we go back in Jan 2nd. I'm just wondering if becuz its not going to be $100% payback, is that why the payment is so high? We have over $220,00.00 of debt plus a 2nd that will be wiped out, so I should be grateful right? Yes I sure am, but we still need to be able to get by each month

[Pjmax]

I filed a 7, so I don't know much about a 13, but the attitude and "advice" of atty. #1, just seems not right. I think someone else mentioned that it is as if he was working for the trustee and not you. However it works out, you need an atty. who will do the best for you and create a plan that will allow you to be successful and complete it. I'm crossing my fingers for you that you will find the right lawyer for your situation.

[keepsmiling]

100% payback has nothing to do with it.
The first guy was just hopeless. Unless you have the WORST 13 tt and judge in the country-- and that's not completely out of the realm....
Be sure to be asking about the 7 too. And keep asking q's here too. I am really glad you found us.
And call another few guys too.

[ValleYum]

Your medical expenses for child on the spectrum seem REALLY low.

Having a child on the spectrum makes life insurance (is it a TERM policy?) almost a necessity not a luxury.

Please let Santa find you a new lawyer for Christmas. Please?

[momofthree]

Momofthree. Do you mean you have a car payment of $511.00 or your plan payment is $511.00? Our current car payment is $388.00. It will be paid off in 1 year. The other atty wanted to put the car payment into the plan, lowering the payment to $108.00 per month, which would give more to the trustee...so I understand that part, but the payment would be for another 5 years. Either way we won't be seeing anything extra on our part. I's all about how much more can they give the trustee.

Our car payment is $511 and it is in the plan. The car, tt fees, and attny fees are all that we are paying in our 13. I also have a child on the spectrum (high functioning thankfully), and we follow the DAN! protocol for him and it is quite expensive. We spend upwards of $5000 out of pocket each year--proved on our taxes--and it wasn't questioned either. Unless you have non-exempt assets (in CA that is doubtful due to the generous wildcard), you could potentially end up in a 0% payback just like us. You just need to find the right attorney.

[sheilaE]

Thank you everyone! I now feel like there is hope versus the hopelessness I felt last Monday. Just going to put a smile on and get through the Holidays and then plow forward.