Creditors Meeting Complete, but many ?'s

[tfabian]

We had our creditors meeting and there was an objection by the trustee to some childcare costs in the plan. As it turns out, she overlooked the fact that preschool costs were included in our childcare amount, so the number we gave her for "childcare" when she asked, didn't add up. Our attorney said he just needs to send a letter and we likely will not have to appear in front of the trustee. But I do have a few questions....

1) We pay $780/mnth to the trustee. This does not include our $1600/mnth mortgage and $578 in student loans. In the plan, there is $300 budgeted for a car. Does the trustee send this payment directly to the lender once we find a vehicle and loan?

2) Since we have already paid 1 mnth to the trustee, if we don't get a vehicle until 2 mnths from now, after the trustee has had 3 payments ($900 of which is allocated for auto), will that entire portion be sent to the lender, such as a down payment?

3) At our creditors meeting this week, nobody asked about our tax return. After we pay the state, the portion remaining from the federal return will be around $7K. The attorney advised us that we might want to expedite our refund and utilize this money for a down payment on a car or something else before the trustee inquires about it. Thoughts?

4) My income and expenses vary tremendously from one month to the next. Last year I made 90K, the year before 115K, this year probably closer to 115K. Since a large portion of my income is commision based, one month may pay $2400, the next $12000. Childcare/preschool expenses today are $980, in April they will be 1260, in August they will be $1400. Our attorney used $1200 in our plan as an average. Do I inform the trustee every month of what's going on? I am freaking out that if I don't, they will happen to look over my shoulder during the wrong month and think I am hoarding tons of cash. I also get reimbursed for work related expenses. Sometimes that is $400 a month, sometimes $4000. With this month-to-month fluctuation, what should I expect from my trustee? I'm in Northwestern Indiana.

These cashflow situations are what got me in trouble in the first place. Input anyone?

Thanks,

Todd

[SinkingFast]

It's odd that your attny filed a Plan with a payment for a car when you aren't supposed to take on new debt for a year.

Generally speaking, the Rules of Ch 13 are,........... You have to be in your Plan for a year with "On Time" payments before you can incur new debt. At that, we were told we could only buy a car and/or a house. And you have to get approval from the Trustee first.

Maybe your attny sought and got approval from the Trustee for you to purchase a vehicle at the onset of your plan??!!

[tfabian]

Yes, that is what he is doing....getting approval on the front end of the plan. He budgeted in $300 for a car we don't have yet.

[lrprn]

Todd, your car situation is a unique one. I don't think I've heard of anyone here putting a car purchase inside their plan before when they filed. What does your lawyer say is going to happen?

Income and/or expenses fluctuation from month to month is not uncommon for Ch 13 filers. Although in their infinite wisdom Congress seems to think that we all get paid the same amount consistently and our expenses don't fluctuate from month to month, we all know that's not the case. The living expenses you filed are supposed to be averages over the year, not monthly set amounts. You are supposed to save the money from the lower cost months to cover the higher cost months.

Only if you have a considerable, consistent change up or down in your income flow or new expenses crop up that are not in the plan that impact your ability to pay your payments will your lawyer need to consider an amended plan to accommodate it.

[Ch7Ted]

Given that you are making "planned" $300 a month payments to the Trustee, could you "lease" a car and the Trustee make the lease payments from your payments? Your attorney could think that the above proposal is absurd; however, I would think that the Trustee has the legal authority to negotiate a lease on your behalf if you can establish that your line of work requires a dependable automobile. After the term of the lease, the Trustee surrenders the car while you pay for insurance, maintenance, gasoline, upkeep and the lease payment to the trustee and the plan payment to the trustee.

Like I mentioned, the above suggestion could be a bit ludicrous. Think about it - bankruptcy trustees operate airlines and other big businesses. Leasing a car is child's play....

[SinkingFast]

Given that you are making "planned" $300 a month payments to the Trustee, could you "lease" a car and the Trustee make the lease payments from your payments? Your attorney could think that the above proposal is absurd; however, I would think that the Trustee has the legal authority to negotiate a lease on your behalf if you can establish that your line of work requires a dependable automobile. After the term of the lease, the Trustee surrenders the car while you pay for insurance, maintenance, gasoline, upkeep and the lease payment to the trustee and the plan payment to the trustee.

Like I mentioned, the above suggestion could be a bit ludicrous. Think about it - bankruptcy trustees operate airlines and other big businesses. Leasing a car is child's play....

One problem with the Lease suggestion that I see.

That size Plan payment with that size mortgage payment doesn't sound like under the Median to me. I'm guessing the OP is filing for a 5 year Plan.

Most lease agreements are for 2-3 years. If the OP does a lease, they'll have to go back to the Trustee in 2-3 years to get another car. Whereas if the OP purchases a car, they're set for the duration of the plan.

[tfabian]

It is indeed a 60 mnth plan. I guess I wasn't aware that what my attorney was doing is unique. He even advised me that I may want to go car shopping prior to the plan being finalized. Based on that, I think he is confident that it will be acceptable to the trustee. Al lease isn't practical because I drive arounf 40,000 miles per year for work, however this vehicle would be the primary one for personal/family use which would see about 20-30K per year.

I need this vehicle to last 5 years, fit 6 people, with low miles. I don't believe that $300 per month will find that....which is why I am hoping to get the income tax return and put in down on a vehicle.

[SinkingFast]

The main problem you'll run into looking for a car is your idea of what you need vs the Court's idea of what you can have.

You're looking for lower miles. Something for 6 people. Maybe you live where there's lots of bad weather in the winter. Your idea of the perfect car is a large, 4X4 SUV.

The Court however, thinks in terms of what suits your basic needs. Something that will seat 6 people. Maybe a Snow White and the 7 drawves sized minivan. Or an older, large car.

Roughly, you're looking at being able to buy something priced at less than $15K, if you can get 11% interest.