Months or Money

[dovette7]

If were were able to pay 100% to unsecureds (by getting a higher paying job) prior to confirmation.... is trustee going to look at 100% payback for 60 months OR cut our budget down, higher payment for less months?

[HHM]

Your duty under the BK code is to devote all your disposable income to the plan, so if you have more disposable income and are able to pay 100% back to creditors, that translates into, higher payment, fewer months.

[lrprn]

If were were able to pay 100% to unsecureds (by getting a higher paying job) prior to confirmation.... is trustee going to look at 100% payback for 60 months OR cut our budget down, higher payment for less months?

As a high-income filer, the law requires you to pay all disposable income into the plan for 60 months *or* until the creditors that file claims by the deadline are paid back 100% - whichever comes first. You can't be forced to keep paying after all the creditors who filed claims are paid in full or after paying for 60 months.

Is your current plan paying back your creditors at 100%? Have all your creditors filed claims?

[dovette7]

Our currant plan is paying about 18% to unsecureds. My husband had a big paycut last year which is one reason we are filing... we were making it with that pay but when it was cut...couldn't pay minimums anymore.

He is in negotiations this week for another position where he would get a substantial increase in pay. Enough to put us in 100% unsecured payback. I was wondering if he gets this job, would they let us pay 100% for 60 months or would they keep our budget at the bareness it is and pay more for less than 60 months? I know there will be more expenses with the new job, so I guess it depends on redoing the Scheduales??

Most of our creditors have filed claims..80% so far. I have 1 large one that hasn't filed yet. They have until the July 9th.

[lrprn]

You're caught in a gray area of the new bk law, Dovette.

There's inconsistency right now in the case law that's come out after BAPCPA went into effect in Oct 05. There's no clear answer about what to do when a Ch 13 filer's income increases significantly after filing.

The law is clear that the Means Test and Schedules are based on your total gross income during the prior six months before filing. However, some bk judges have also said in their opinions that your "future income" after filing should be taken into account too.

In our bk district, our judge interprets BAPCPA literally. His opinion is that changes in income after filing Ch 13 have no bearing on what you are required to pay unless your income decreases - that if Congress wanted future increases in income to force an upward change in your payments, then they should have written the law that way. Since they didn't, too bad. However, other bk judges in other districts have ruled exactly the opposite, so it's impossible to predict what will happen in your case if your husband does get the new position with a higher salary .

Right now, until your husband gets his first new increased paycheck in hand, your situation hasn't changed since you filed. Keep your lawyer informed, but unless he/she advises otherwise, say nothing to your trustee or the courts at this point. The courts can't base your case on what *might* happen, only what has actually happened.

[HHM]

lrprn's judge is one of the more enlightened, the other factor is that, regardless of how the means test etc works, future income has "always" been part of your BK estate in a chapter 13 and continues to be so. Many people (and many lawyers) get this confused between chapter 7's and chapter 13's. In a chapter 7, the "minute" you file creates the BK estate, all your assets and debts that exist before that minute are part of the BK estate, any assets or debts you acquire after that minute (with some exceptions) are not. In a chapter 13, your estate is created at the minute you file, but the chapter 13 grants on-going jurisdiction over your future income (it has to because how else could it legally maintain a right to your disposable income in the future, for 60 months).

Bottom line, if the new job materializes, "expect" that your chapter 13 plan will be altered and plan your household budget accordingly, but be relieved if the plan is not altered.

[ruggal]

I'm a little late on responding here, but I think a lot depends on the district. At our Financial Planning course, conducted by our trustee's office, we were told that the trustee will allow $15K additional income before he looks to change a plan.

Their hope is you would be able to put more (any) money into your savings or retirement accounts which is one of the basics of any good financial plan. It would also give you a cushion, and greater liklihood of completing the Chapter 13 plan.