Question about C13 payments.

[tay666]

Up until now I have mostly researched chapter 7 stuff.
Now I am looking into how chapter 13 works.

I was wondering about what happens if you get a raise during your chapter 13.
And how are bonuses handled.
As my current employer gives out xmas bonuses, but the amount varies depending on how well they did that year.

Do you have to report these kind of things so they can increase your payments, or what?

Also, what determines how long the payment plan would be for?
We have a lot of debt and more than likely the creditors will only be getting pennies on the dollar.

We currently have about $100,000 of debt. Including the $20,000 we owe on our house yet.
We are well below the median income. (Ohio's median is $58,475 for a family of 3 and we only gross about $30,000).
I figure we could possibly be looking at payments of somewhere between $200-300 a month with our income and bills. (maybe less, as I haven't gone through and done a full analysis of what we can claim). Also figuring on paying our mortguage outside the plan. As it is current and has never been late.
Our car is way upside-down. Owe $20,000 Blue Book values it at around $10,000. If we give the car back we would still owe about $10,000 on it.

So that would be about $70,000 in unsecured debt.
Would we be able to get a 36 month payment plan.
Or would we more than likely be looking at a 60 month plan.

3 years wouldn't be too bad. But 5 years, I don't know. Might be better off letting the house go and take a chapter 7 instead. During that 5 years I can see a lot of repairs having to be put off as most of our income would be paid into the plan and wouldn't be available for things like a new roof, or other big ticket items that will be looming in the not too distant future.

I realize I will get better advice from a consutation from a BK attourny. But their aren't a lot that are within easy driving distance. So I am trying to get as much info and research done ahead of time, so I don't waste any of these consultations.
Better to go in armed with specific questions I need answered and that have actual possibilities. Than to go in with only pipe dreams and hopes.

[quietsound]

well i can answer the part about the bonus at christmas time because my husband gets a royalty container check that varies and what my lawyer did was he took the amount of the check from 2006 and divided it by 12, came up with a figure for a monthly income, and added it in as income. He did the same thing with our refund check from the IRS. In doing that, you can KEEP your bonus and refund up to that amount. if the check you get goes over that amount, technically you would have to give in excess to the trustee.....so make sure your lawyer ADDS your bonus and/or irs refund to your income so you can keep these things.

Now, about the car.........you would have to check with the lawyer because in our state if you have a car payment and have had the loan for 180 days and more, you only pay back what the car is worth. so that if you owe 20k and then the book value is 10k that is what you would pay back...making the extra 10k unsecured.

See with us, our house is joint, in tenants in its entirety....the car is in his name, they wrote of 7k of it as unsecured but he owns the car, not me, and anything that is not jointly owned we don't pay back on.

So there are a lot of things you need to ask a lawyer about and each and every case is different.

hope this helps a bit.

[lrprn]

I was wondering about what happens if you get a raise during your chapter 13. And how are bonuses handled.

A lot depends on what the local customs are to handle these in your bankruptcy district. Some Ch 13 trustees only care if the extra income raises your filing income by 10% or more, other Ch 13 trustees want to know about any increases in income and will decide if the extra is worth them coming after or not.

Do you have to report these kind of things so they can increase your payments, or what?

When you file or during your 341 meeting, the Ch 13 trustee will give written or oral instructions if he/she wants to be notified about increases in income and how. If the increase you get (raise, bonus, windfall, etc) is high enough and is not offset by increased expenses, then your monthly plan payment could be increased accordingly because you now have more disposable income than you did when you filed.

Also, what determines how long the payment plan would be for? We have a lot of debt and more than likely the creditors will only be getting pennies on the dollar.

The new bk law that went into effect in Oct 05 mandates that Ch 13 plans are to be 36 months or 60 months long. Some local variations do exist (for example, our Ch 13 plan is set for 57 months). Typically the only filers who get 36 month plans these days are those that are just above their median income for family size and have the bare minimum of disposable income to put towards paying back creditors (typically between $100-160/month). Everyone else gets 60 months. However, not all creditors request to be paid back in your plan - some just write you off and move on. If your payment pays off the creditors that are included before the 60 months is up, your plan ends when those creditors who did request to be paid are paid back 100%. Another early escape option is after being in the plan for two years or more, you get the trustee's permission to buy out of your plan early by taking out a second mortgage on your home, you win the lottery, etc. to pay back the creditors 100%.

We are well below the median income. (Ohio's median is $58,475 for a family of 3 and we only gross about $30,000).

If this is the case, why you are looking at Ch 13 as a possibility? Chances are very good that if you pushed on through the Means Test, you will find you don't have enough disposable income every month to support a Ch 13 plan. In Ch 13 your creditors must get back at least as much as they would get if you filed Ch 7 - I doubt in your situation there's enough disposable income (if there's any at all) to do that. Of course, only a qualified bk lawyer can tell you this for sure.

[tay666]

If this is the case, why you are looking at Ch 13 as a possibility? Chances are very good that if you pushed on through the Means Test, you will find you don't have enough disposable income every month to support a Ch 13 plan. In Ch 13 your creditors must get back at least as much as they would get if you filed Ch 7 - I doubt in your situation there's enough disposable income (if there's any at all) to do that. Of course, only a qualified bk lawyer can tell you this for sure.

The only reason we are considering a chapter 13 is because of the house.
Our house probably has a market value of around $50,000 and we only owe about $20,000.
In Ohio we only get a $10,000 homestead exemption (5k for each of us).
So we probably have way too much equity to go the chapter 7 route.

Even though I doubt our house would ever sell for that much. (we tried to sell about 4-5 years ago at that price and never even got a nibble) Since it has been appraised at that value (according to the tax office) then I doubt the trustee is going to let us claim it is worth less.

[treehugger1]

lrprn i scorrect about local "rules." Legal counsel suggested to me that while I would be expected to turn over tax refunds, any income exceeding 12% woul donl yraise its head come the end of the year when I submitted my tax returns to the trustee (required the first three years in the plan is my understanding). This coul dbe beneficial to someone filing and confirming a 13 plan coming off a very high income year. The trustee is not goin gto ask for a paystub for every month you are in the plan. Any notable percentage increases will show up in your submitted tax filings after you file the plan. A bonus averaged over 12 months shoul dnot raise any eyebrows, unless it is substantial. My thoughts, for what they are worth.

Tim

[bige1030]

Now, about the car.........you would have to check with the lawyer because in our state if you have a car payment and have had the loan for 180 days and more, you only pay back what the car is worth. so that if you owe 20k and then the book value is 10k that is what you would pay back...making the extra 10k unsecured.

I thought you could only do that under the new law if your car loan is more than 910 days old (and other secured loans are more than a year old).

[quietsound]

i stand corrected, it is 910 days, sorry....i got my figures confused. but it did save us a lot of money.

[tay666]

I thought you could only do that under the new law if your car loan is more than 910 days old (and other secured loans are more than a year old).

Thanks for that clarification.
As it does make a difference in our case. As the loan isn't quite a year old yet.

[quietsound]

That's really a shame because it did save us a bit of money since my husband's car technically we owe more than what this car is worth.