Newbie Getting Ready for Chapter 13 Filing

[kornellred]

Hello Group -

One of the hot topics among Chapter 13 filers that never seems to get answered clearly has to do with the occasional huge disparity between the allowable deductions on Form 22C when determining disposable income, and the actual expenses of the debtor.

I went searching for information on this topic because it is quite relevant to me. One BK judge is quoted as saying that Form 22C describes the minimum disposable income that will be accepted in a payment plan, but the ultimate figure arrived at will depend upon the actual living expenses of the debtor.

A good lawyer can horse around with certain figures that cannot be determined with precision. But certain other expenses such as housing and maintenance costs are easier to determine with more exactitude. For instance - the mortgage/rent allowance for Middlesex County, New Jersey is $1100 per month in the IRS look-up table. I am a renter and pay far less than that - plus my utilities are included. That very significant difference could be applied by the trustee to the payment plan.

That would give me absolutely no "wiggle room" in the future if my housing circumstances were ever to change.

The trustee's job is to seek a fair compromise. The attorney's job is to secure the best settlement for the debtor. I wonder how often these objectives are at loggerheads with one another.

I have not had a follow-up visit with my own attorney since deciding to file. I would appreciate hearing from anyone who has had this particular dilemma.

Thanks in advance,

Willie R.

[SinkingFast]

If you move in the future,............ Or your rent where you live now were to significantly increase for whatever reason,........... You'd go back to your attny and seek a Plan Modification.

There have been people here who had medical emergencies. Their Trustees agreed to reduced payments for a few months to allow for the people to pay medical bills.

A lot of what can happen in the future will depend on the Trustee you draw. The attny you select. The relationship your attny has with the Trustee. What the Court in your area does and does not allow.

We have one BK Law, but it's not applied the same everywhere.

[Flamingo]

The trustee's job is to seek a fair compromise. The attorney's job is to secure the best settlement for the debtor. I wonder how often these objectives are at loggerheads with one another.
I have not had a follow-up visit with my own attorney since deciding to file. I would appreciate hearing from anyone who has had this particular dilemma.

No one has a crystal ball when they file for Chapter 13. 3 to 5 years is a long time to try to survive on what is left after the matter is sorted out and you actually work with the Plan. Two things; question your attorney as to your thoughts in your post and the second thing is you will need to learn how to curtail your lifestyle which can be a very hard thing to do when you are used to having credit cards around. Learning to live by cash only and cutting back severely takes its toll on everyone. There is no magic bullet to get anyone past that. Everyone who files for Chapter 13 has learned to shop in discount stores and use coupons. If there is a large decline or increase in your income during the Plan, the Plan can be modified upon that event.

You'll be surprised how you can get by on what is left in your Plan that goes in your pocket. You will need to try to save what you can out of that for car repairs and any household repairs you may have. It will not be easy and you will have to learn to budget and then budget some more. We became masters at budgeting; something that we did not do much of prior to filing since we had plenty of income coming in until the job loss hit taking 70% of it away.

Best of luck to you but your attorney is your best source for the information you are seeking for your particular situation. If and when you do file, try to save as much as you can on the side to handle those inevitable repair bills, new tires, appliances breaking down, etc. They will happen.

[MajorMike]

The thing I don't understand is, our payment is very low. We can easily afford it. It gets confirmed at the 341 and we have lots of wiggle room. Our attorney figured our expenses very high since we live in a high income area but have low actual expenses. We're also blessed that our trustee doesn't want tax returns at all during the plan, nor do they want to see future paystubs. Luck of the draw.