How is commission figured?

[UpsidedownJo]

I make a base pay and commission pay. There are certain part of the year when things are slow and I only make my base pay. There are other times of the year when I can make 3x my base pay. How is this calculated in my payment? If the trustee sees that on one month I made 4K and four months later I made 10K and the next 2 months I made 5K. How is all this calculated? Will my payment be so high I cant make the payments on the slower months? What about years that are tougher than others? Am I overthinking this?

[justbroke]

Commission-based pay is not a good thing in a Chapter 13. What happens is that your Means Test will annualize your income based on the last 6 months prior to filing. They will then multiply that by 2 to get an annual income estimate. They will then divide that by 12 to get monthly. Using the various forms and "fixed" expense categories--known as Means Testing--they come up with a disposable monthly income (DMI). This number could be more than you typically make or less.

The problem is that a Chapter 13 is better with consistent regular income.

To make matters worse, there are two forms, Schedule I and Schedule J, that will look at your actual income annualized. Schedule I is the "actual" income calculation. Schedule J is the "actual" expense calculation.

So if you make $96K before commission and $144K after commission, your income will be calculated at $12K a month and not $8K/month regardless of when the commission is earned. This can wreak havoc on the plan because you'll have months where you only make $8K but need to pay $12K into the plan. Take note that if this were merely an annual bonus, that's easier to deal with.

Maybe your attorney can fashion something but it's always difficult to come up with a number when there are significant swings in monthly income due to commissions.