Trustee is not looking at 6 months of prior income as stated in the law

[shipo]

Yeah, I'm focusing on the lease thing as well; even if the lease was allowed, what would happen mid-Chapter 13 when the lease ends? I had to deal with something like that in my Chapter 13, but instead of my financial lease ending, my car's "lease on life" ended and I needed to get my hands on something newer. Had I taken my attorney's advice and financed a new car before I filed, I would have come out significantly ahead; instead I needed to dig into my meager savings account and pay cash for an old car.

[louie123]

I would echo exactly what flashoflight has just written. I totally missed the high lease payment (the Trustee would, and probably did, reduce it to $533/month). Also, if the lease ends during the Chapter 13, that could be problematic too.

louie123 you need a good sit down with your attorney to review all your expenses. There is something missing here.

I was told by my attorney that when the lease ends during my Chapter 13 that I can get permission from the court to lease another vehicle.

[louie123]

First, please be aware that your payment to the Trustee could include your mortgage payments, arrears (if any) as well as your car payments all bundled together.

Second, Chapter 13s are not based on the Means Test. The Means Test, as one judge quoted, is only the begining of the inquiry. Since the Lanning decision, all Chapter 13 payments (calculation of DMI) is based on a combination of the Means Test (as the minimum amount to pay) and Schedule I/Schedule J.

Finally, your attorney can and will object to the Chapter 13's assertion, but it reads as though you do have disposable monthly income (DMI). That DMI is more than what's on the Means Test (MT) because the MT looks backwards -- which is almost never a real view of today. Schedule I/J looks forwards.

It's not the end of the world. Work with your attorney and try to find why the Trustee's number is so high. You may need to adjust your Schedule I/J if you were depending heavily on the value on the means test. A Chapter 13 plan is more a contract negotiation than the simple means test. I can't answer any questions related to why you concentrated on the number of the Means Test and not the bottom line number on Schedule J.

If your attorney told you that the DMI number on the Means Test is what you pay, that's simply incorrect (even for the Means Test). Unless you are current on mortgage or cars, all bankruptcy districts require the debtor to pay all secured debt through the Trustee. (In some districts, even those that are current must pay through the Trustee.) Your first goal is to find out what's included in the Trustee's number.

So, you need to sit with your attorney and ask these questions:

• does the Chapter 13 Trustee's amount include my home?
• does the Chapter 13 Trustee's amount include my car?
• Did we miss expenses on Schedule I/J that I should include?
• did the Trustee correctly calculate based on Schedule I/J

It appears the trustee and my attorney are relying heavily on the means test and NONE of the bottom lines on Schedule J.

I can send you a copy of this if you don’t mind reviewing.

[shipo]

I was told by my attorney that when the lease ends during my Chapter 13 that I can get permission from the court to lease another vehicle.

Yes, that is true, however, that also falls under the heading of "Poking the bear", I've heard anecdotally this can end up in a reexamination of your finances and result in higher payments. The general consensus is, the fewer interactions with the Trustee after the 341 meeting, the better.

[justbroke]

It appears the trustee and my attorney are relying heavily on the means test and NONE of the bottom lines on Schedule J.

I can send you a copy of this if you don’t mind reviewing.

I thought that your Means Test showed an amount much less than $2,650 so that's why I'm confused. I would not want you to send me your means test, as we keep anonymous on this site as much as possible. Your attorney is much more intimate with your expenses, income, and situation and is the best resource.

It may be that the Chapter 13 Trustee redid your means test using your current income. This does happen because they try to figure out which values that you utilized. You would need to see what the Trustee did with your numbers since your means test number doesn't match.

[louie123]

I thought that your Means Test showed an amount much less than $2,650 so that's why I'm confused. I would not want you to send me your means test, as we keep anonymous on this site as much as possible. Your attorney is much more intimate with your expenses, income, and situation and is the best resource.

It may be that the Chapter 13 Trustee redid your means test using your current income. This does happen because they try to figure out which values that you utilized. You would need to see what the Trustee did with your numbers since your means test number doesn't match.

Yes, I believe the trustee is requesting we resubmit the means test with my current income instead of the average income over the last 6 months from the day that I filed.

The means test calculation is using national standards is $4,400, my gross income (not net for some reason) is showing as $7,600.

However my Schedule I/J forms are showing my new job income AFTER TAX, of $7,400/month with $6,666 in expenses; hence how the $759 monthly payment was determined. So this is the one that is showing a much less less payment, not the means test.

However, please keep in mind, in my means test calculation, no real figures are being used for my *actual* mortgage and taxes, just all national standards. I do see my mortgage listed in there, but it doesn’t seem to be calculating in the $4,400 for expenses on my means test, well at least not the full amount, just my counties “national standard”.

Does this help, and is there any leverage I may have with the trustee?

[justbroke]

Yes, I believe the trustee is requesting we resubmit the means test with my current income instead of the average income over the last 6 months from the day that I filed.

Many of the Chapter 13 Trustees that I have seen, request the B122-C (Means Test) be redone with "current" income (not current monthly income as defined in the code). That's because the Means Test used for a Chapter 7 is technically a different usage than for a Chapter 13.

The means test calculation is using national standards is $4,400, my gross income (not net for some reason) is showing as $7,600.

Yes, you use gross income. Both the means test and Schedule I should be using gross income. From that number, allowed deductions are then made on Schedule I (and on the Means Test).

However my Schedule I/J forms are showing my new job income AFTER TAX, of $7,400/month with $6,666 in expenses; hence how the $759 monthly payment was determined. So this is the one that is showing a much less less payment, not the means test.

Your expenses seem very high for a single person.

However, please keep in mind, in my means test calculation, no real figures are being used for my *actual* mortgage and taxes, just all national standards. I do see my mortgage listed in there, but it doesn’t seem to be calculating in the $4,400 for expenses on my means test, well at least not the full amount, just my counties “national standard”.

Yes, but the Means Test does use your actual mortgage and taxes. On line 9a you put the national standard, but on 33a you put the entire amount. As I wrote above, your line 9c is like $0.00, but your 33a is your entire mortgage payment (PITIA). Please make sure that the amount on 33a includes your principal, interest, taxes, insurance, and association dues (if any).

Does this help, and is there any leverage I may have with the trustee?

Redo the means test (B122-C). As I wrote, the Means Test is the "baseline" or beginning of the inquiry in a Chapter 13. Think of the Means Test as the minimum amount that must be paid. That amount is the DMI added with the secured debt, priority and Trustee commission and you get your total amount payable to the Trustee. So you will need to rework the Means Test. You use your actual (not net) income. You adjust for taxes.

One of the issues with your taxes could be that it's a new job and you may be estimating taxes incorrectly. Additionally, the Trustees know that tax withholdings may be too much and actually hide additional net income.

I think your number is somewhere between your original number (based on the lookback) and the new Trustee number. It may be closer to the trustee's number than your number. Your expenses on Schedule J ($6,666) seem way high for a single person even with the mortgage. If there's some reason why that expense number is so high your attorney can go to an evidentiary confirmation hearing and plead that Schedule J should be used (based on the Lanning decision). I would first get a handle on the Means Test plugging in the numbers that the Trustee used to see how the Trustee arrived at the number. I'm pretty sure it's because the Trustee is using your current actual numbers and not the "lookback" numbers.

[flashoflight]

Yes, that is true, however, that also falls under the heading of "Poking the bear", I've heard anecdotally this can end up in a reexamination of your finances and result in higher payments. The general consensus is, the fewer interactions with the Trustee after the 341 meeting, the better.

100% agreed. I'm actually in the middle of "poking the bear" in my own chapter 13. My trustee I would describe as the "friendly neighborhood trustee". I did not change any of my expenses other than the mortgage. I've had my most controversial budget items re-examined for proof again and a bunch of paystubs. I submitted receipts and that was that. But in general, you need a real good reason for poking the bear again or you might become dinner for the bear.

OP, get rid of the leased car and get an auto loan with a newer car known for reliability. The trustee will probably make you get rid of it anyway. If you can keep your auto loan payment a decent amount below the max allowed, add a car manufacturer's extended warranty on it while keeping the monthly below the max of 533 or whatever it is.

[justbroke]

For those wondering, a Chapter 13 allows you to keep any property, so long as you pay. If you are over an allowance based on the UST Program Allowances (IRS Collection Financial Standards), the trustee will complain, but that doesn't mean you give it up. You just have to give the unsecured creditors the difference.

The beauty of a Chapter 13 is that it allows you to keep any property. The downside of a Chapter 13 is that it allows you to keep any property.

Let's take an example. The code (IRS CFS) allows $533/month for a vehicle in a Chapter 13. If your vehicle is $783/month, then there is a $250 variance. You must pay an additional $250, over your calculated DMI, into the Chapter 13 unless you are already in a 100% Chapter 13. The problem with that is not readily obvious. The problem is that the extra $250/month is going to come from somewhere in an already tight budget! This is why some people end up in a 100% Chapter 13. (Think about it... $250/month for 60 months is $15,000.)

The absolute best way to maximize a Chapter 13... is to have a vehicle payment of about $250/month! If the Trustee goes by the Means Test, then you just earned yourself $253 in buffer (because the allowance is $533/month). This is precisely why I didn't let one of the vehicles go. It would have been tough with one vehicle, but with two vehicles, I got to keep them and the payments weren't anywhere near the $509/month (at the time) allowance. Vehicle strategy can be very important in a Chapter 13. (You also get a vehicle maintenance allowance of around $225/month (varies by area of country).

These little nuances are what makes a Chapter 13 plan important for over-the-median, and even some under-the-median, filers. You do not want to go into a Chapter 13 plan with (forced) belt-tightening, then have to pay an additional $250/month over your calculated DMI. Expiring leases, as already mentioned, can be problematic when you must wake the sleeping bear to seek permission to replace the vehicle. That (almost) always requires new Schedule I/J and maybe even a new means test, along with evidence of expenses and income.

It sounds complex because a Chapter 13, regardless of how easy an attorney can make it appear, requires a carefully orchestrated plan (of reorganization). One in which you try to maximize expenses within the limits, while making sure you are not keeping too much property.

Edited to add: an "infeasible" plan is either a.) a plan you simply can't afford, or b.) your plan does not propose to pay the required 'plan base' within the plan duration. In some cases, a debtor may try to keep property that they simply can't afford. The word 'afford' references the requirements of the approved plan. A debtor may want to keep a financed boat, for example but the Trustee will want every dollar of the payments to also go to the unsecured creditor pool (by adding it to the DMI).

So, yes, a Chapter 13 debtor could keep the $500/month boat, but the debtor must add $500 to their DMI. I don't know how anyone can do that and survive; hence the term infeasible. Where many Chapter 13 debtors also get blindsided is keeping property with significant equity. In a Chapter 13, a debtor must pay at least as much as the creditors would have received in a hypothetical Chapter 7 liquidation. If a debtor owns a $60,000 boat outright, and wants to keep it, then the debtor is going to need to add an additional $1,000/month to their DMI (payment to the Chapter 13 Trustee). In many cases, this just becomes a 100% plan.