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Confusion on estimated Chapter 13 payment

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  • Confusion on estimated Chapter 13 payment

    i just received an estimate from my attorney office for my Chapter 13 payment. My disposable income is 899.14. I have to repay my car in full. They are estimating my payment to be around $1400. When explaining this to me, they said that the extra money includes trustee fees, attorney fees and my car payment. I am having a hard time understanding why my car payment is not part of the 899.14. I understand the extra part about the attorney but trustee fees. Anyone have any insight into why the car would be outside the disposable income. The car loan is upside down.
    Filed Chapter 7: 02/18/10
    341 Meeting: 04/02/2010
    Discharged: 06/10/10
    Closed: 06/10/10

  • #2
    If your disposable monthly income (DMI) was calculated at $899.14 a month, then that is what's left over after paying the allowed expenses, debt service, and administrative expense.

    You will need to sit down and go through Form B22C-2 so that you understand what is Current Monthly Income (CMI), what is expense, what is debt payments, and what is DMI. The Trustee fee is an administrative expense, but it only reduces DMI (not added to DMI). Technically, you could say that the Trustee fee doesn't come from DMI precisely because it's an expense (a priority or administrative expense). But, DMI and the Trustee fees are complementary. Attorney fees may be treated as administrative expense, but they are usually not.

    The only way that you are going to understand how your Current Monthly Income (CMI) is reduced by secured debt, domestic support obligations, the Trustees fee and any other priority or administrative fees (back taxes are priority), you'll see how they fit with relation to your CMI. Again, the best way for you to see this is to see the Form B22C-2.

    The last thing that may affect this, is if you're in a 100% plan. If that $899.14 is per month for your commitment period and multiplying that commitment period by the $899.14 a month is the amount of all the unsecured debt, then you are definitely in a 100% plan.

    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
      Colorfulstom, two reasons why your plan payment might exceed your DMI are (1) you have arrears on secured debt (car or mortgage) or other priority debt (taxes, back child/spousal support) and you need to pay more than your DMI to cover the priority payments and the normal payments during your plan and (2) you have non-exempt assets that must be paid for during your plan. There are probably other reasons, but these seem to be the most common.

      If you do not have arrears on your car, you should talk to your attorney about making that payment directly to lower the trustee fee. You should also ask whether you have to pay the entire loan off during the Chap 13. I think it may be possible to have a portion of a car loan remaining after your Chap 13 if you don't have pre-petition arrears and you are able to keep regular payments current.

      ETA: I missed the fact that your car is underwater. If you are cramming down the loan, then I think you do have to pay it off during the plan and the trustee must make the payments. You might want to consider giving up that car and buying a less expensive one before you file.
      Last edited by LadyInTheRed; 12-06-2018, 12:56 PM.
      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


      • #4
        Something just doesn’t seem right. I took my last two paychecks, added them together to get my average monthly take home pay, subtracted my rent payment and the 1400 that they want for Bk payment. It left me with 672 to pay fixed expenses for electricity, phone, cable, car insurance as well as groceries, gas, prescriptions and other essentials. After electric, phone, car insurance, cable and gas I am left with about 130 for groceries and other essentials. These paychecks included overtime. Without overtime I am left with 280 to pay all above. Am I missing something in my understanding about chapter 13? I really need to think hard about filing this bankruptcy or just letting discover garnish my wages. I am losing sleep and have so much stress over trying to figure out what to do.
        Filed Chapter 7: 02/18/10
        341 Meeting: 04/02/2010
        Discharged: 06/10/10
        Closed: 06/10/10

        Comment


        • #5
          There is just something else wrong, and that is for sure.

          Are you paid bi-weekly or semi-monthly? If you're paid bi-weekly, then you can't get your monthly average by just multiplying two paychecks x two. Additionally, your average monthly income is pre-tax (not after tax). The forms then do take into account your tax rate but you may have overwitholding (more on that later). If you make overtime then they are including that income. Form B22C-1 determines your "monthly" income (Current Monthly Income) by looking at ALL income for the last 6 months (and dividing by 6). The only way for you to personally calculate this is to use one of the online calculators (such as the one at Legal Consumer (https://www.legalconsumer.com/bankruptcy/means-test/) or to actually complete forms B22C-1 and B22C-2.

          B22C-1 Calculation of Current Monthly Income

          Fill in the average monthly income that you received from all sources, derived during the 6 full months before you file this bankruptcy case... For example, if you are filing on September 15, the 6-month period would be March 1 through August 31. If the amount of your monthly income varied during the 6 months, add the income for all 6 months and divide the total by 6. Fill in the result. Do not include any income amount more than once. For example, if both spouses own the same rental property, put the income from that property in one column only. If you have nothing to report for any line, write $0 in the space.
          You may be living in an apartment which (the IRS claims) you can't afford. I say that because the IRS Collection Standards (ICS) are used by the United States Trustee (UST) to determine what is reasonable for rent and non-rent (electricity, sewage, water, trash) for a specific state, county and sometime city. You can find the UST Means Testing number here. The lowest acceptable rent (based on the ICS) runs from $537/month in Liberty County, less than $1,000 in most counties, and only a few that can't even get close to the $1,653 in Monroe County; most Counties in Florida have a limit of about $850-900 for a debtor that has no dependents of spouse. If you're paying more than $800/month in rent and don't live in the 5 most expensive counties in Florida, that's where some of this money is going.

          Interestingly, the amount the ICS (and UST) has determined that a single person needs for food, clothing and other necessities is $647/month. Other factors could include if your car is paid off, almost paid off or a lease.

          As LadyInTheRed wrote, sometimes this is caused by trying to keep property that you simply can't afford with the income in question. But, the numbers that you have been using do not make sense in the calculation. Your attorney could be using (and they sometimes do) your last 6 months of income in total (all your paychecks for the last 6 months). If you receive tax refunds, that gets added back into your income (because it's not actually tax).

          You really need to have an exhaustive review of how the Means Test works in Chapter 13s, and how plans are done based on your actual expenses.

          Links: https://www.justice.gov/ust/means-testing
          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
            I know how stressful it is, having gone through filing for Chapter 13. Have you talked to your attorney? Can you ask him/her "I do not understand and it doesn't make sense to me can you explain this?" My attorney was always helpful, but we never met in person after the initial meeting it was all over the phone. They were always helpful, although I did have one conversation that was quite stern and probably was what I needed to kind of shake me out of my nervousness and some procrastination.

            My car payments are outside of the plan. One car payment ends before our 5 yrs are up. At that time the amount of our payment will increase (I think it's the last 16 months of our plan) by $227. The other car payment will continue after our plan is completing and I will continue paying the auto loan for about a year. We bought that car not long before we filed and it's upside down also as my previous car died a premature death and we owed on that loan which was added to the loan of the new car. The new car is brand new, but a low end compact car so it's relatively smaller expense than other cars would be.

            For our chapter 13 we request that we pay for the house, cars and home equity loan outside the plan (not have the trustee pay it).

            I have a second job with unpredictable income and when I don't have much work on that job the budget is tighter when I hope nothing goes wrong before payday, but it's manageable. When I have more work then there is a little breathing space. I think the income from that job will be the same or slightly higher than last year when we filed, but it's not the same amount every payday. On the weeks when we had less money I would buy groceries for a few days at a time or make sure we had some lunch meat or tuna and bread so I could say "let's have sandwiches tonight" trying to keep it low key like I didn't want to cook when really it's a money saving technique to stretch the budget and try not to stretch my nerves or my husband's anxiety.

            Sorry, if I went off topic slightly. I guess I am saying talk to your attorney to better understand the information and I know how "extra money" like overtime or an extra job can skew the weekly actual cash. And that I think the plan should give you breathing space even if some weeks are tight.

            Comment

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