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Plan amount too good to be true? Attorney filing Ch. 13 soon

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    Plan amount too good to be true? Attorney filing Ch. 13 soon

    Long-time lurker, just created my account today.

    After browsing through the forum and seeing how most Chapter 13s are doable but don't provide that much breathing room, I'm a little concerned that I may have too much left over every month after expenses + payment plan.

    Before I considered filing (single male, rent, no dependents, $58K salary) I had $0 disposable income -- pretty much everything went to debt. But if the plan my attorney says is reasonable gets accepted -- $210 biweekly -- it would leave me with about $1,200 disposable AFTER Ch. 13 payment and allowable expenses.

    Too good to be true? After living like a pauper for a few years I could live like a king with this kind of leftover money.


    #2
    Are you saying that even after you account for everything in your budge like rent, car, insurance, food/basic needs, etc you still have $1200 left over? Are your actual expenses lower than the allowed expenses (like rent, car payment, food, etc)? That’s the only way I can think of that this would happen. But the trustee has the authority to request an increased plan payment if they believe their is significant left over income.

    Comment


      #3
      Thanks Mmwhite.

      Yes, I'm saying $1200 left over after my needs and plan payment. And my expenses aren't necessarily lower than the allowed expenses. I didn't understand why my expected payment would be so low. Attorney did the means test and calculated that $210 biweekly would be my payment. Theoretically shouldn't it be $1600 a month (If I was in a 100 percent plan attorney said it would be around $1080 a month) since this is truly "disposable" income.

      I've read on here where bankruptcy attorneys know how much they can finagle on expenses but my situation seemed a little extreme.

      Comment


        #4
        You're paying back less than 100% I presume. I agree the trustee could ask for more. When we had our 341 the trustee questioned one of our expenses and it truly was an oversight on our part as our expenses had changed from the time we first met with the attorney and the time of the meeting. She wanted a higher payment, but we were in 100% pay back so we were able to keep that money/not pay more. I imagine if we were in less than 100% pay back she would have increased our payment. Maybe your living expenses are less than than average so you have more disposable income than others?

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          #5
          I would not complain. What may be happening is that your attorney is using the IRS standards for your expenses. Even though you don't use, let's say, $575 a month in food, you get that allowance. You also get other things like $289/month for car maintenance, even though you may have a brand new car and spend less than $75/month on service. The other magic number is also with a car where the allowance is $497 (South Census Area) a month, but your car payment is only $297/month.

          Yes, that's not considered disposable. The Trustee could come back and say you need to do some belt tightening, but resist that urge!
          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
            Thanks.

            Justbroke, I'm just worried somehow the trustee will find out I'm not using all my "disposable" income on allowed expenses. Would they ever find out I'm socking away for example $750 a month and then jack up my payment by $750?

            Comment


              #7
              Originally posted by mnyprblms View Post
              Justbroke, I'm just worried somehow the trustee will find out I'm not using all my "disposable" income on allowed expenses. Would they ever find out I'm socking away for example $750 a month and then jack up my payment by $750?
              How would they find out? They agree to the confirmed plan at the time of confirmation. They should object at confirmation if they don't like the amount. Trust me, on good months I had about $750 "extra" at the end of the month. However, life happens and I would find myself shelling out $700 for tires, or $2,000 to repair the sewer line, or $1,850 for new sod (HOA violation), or...

              Life happens.

              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


                #8
                Your response was very helpful, justbroke. I got the impression that the Chapter 13 budget gives debtors just enough money to survive on basic needs. I didn't think there would be opportunities for an emergency fund.

                Comment


                  #9
                  The myth is that a Chapter 13 is punitive, but it's not. However, if you're trying to save property, have secured debt, attorney fees, and other major budgetary issues, it can be oppressive. Chapter 13s work when it is cookie-cutter and simple. When it gets more complex, like mine with some interesting "grossed-up" income and travel, and trying to save property, that eats up the buffer pretty quickly.

                  Take my advice. Don't take that buffer for granted. Save the money each month! If you think you don't need $750 of it to live, then save that amount in an interest bearing account... or put into an IRA/401(k). Saving is very important because... life happens.

                  I strategically kept 2 cars (was going to get rid of one), until I realized that the allowances gave me a better buffer.
                  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

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