13 Question

[Mom2one]

Quick question, when they say that you can't make more the 10% over in a 13. What pay are they basing it on? The tax year prior?

Thanks
Christine

[laurannm]

If you are referring to 10% increase in income, then I would think yes, it's 10% over your prior year's salary as shown on your tax returns (since that is how many of trustees are made aware of income increases).

Keep in mind though not every district follows the 10% rule. Some want to know about every increase, some only 10% or more, others don't require any notification of income increases (i.e. they don't ask for tax returns every year, such as ours)

[Flamingo]

There is no 10% rule...When you are in a Chapter 13, your finances are now under the control of the Trustee from the day you file until the day you are discharged. Therefore, if your disposable income increases or decreases (i.e., raises, bonuses, inheritances, lottery winnings, etc.) or you have an increase in assets (i.e., inherit real property or tangible goods), your trustee needs to be informed. Not to do so can result in the dismissal of the 13, which should be avoided at all costs. All trustees and Chapter 13 plans are different. What one is allowed to do or have to provide as to information to the trustee the other does not have to. Certain districts/states follow different patterns. Just because some people in this forum do not have to provide tax returns during their Chapter 13 years does not mean that you will not have to also, same as to reporting all increases in income or just a certain percentage.

[laurannm]

At the end of the day, your attorney will be the best person to ask as to how your local Ch 13 trustee operates

[Mom2one]

I am not so much concerned about going 10% over, I am just wondering about salary. My hubby's overtime has been cut dramatically. He used to bring hoime 30 hrs. overtime a paycheck and now he is lucky if he has 8. He gets paid every 2 weeks. My concern was IF the economy ever picks up, could he work a little more overtime. If he is allowed to make what our 2007 taxes show then we would be ok. Does that make any sense?

Christine

[laurannm]

That does make sense...but again, it's one of those areas that can vary greatly from district to district. For example, in MA there are two CH 13 trustees...western and eastern MA. The western MA trustee we were told wants tax returns every year and will raise the payment if she sees fit. The trustee in our district (eastern MA), is the opposite. She doesn't require the debtor to report any increases in income or tax returns.

This is probably a good question to ask as you continue with your consults

[Mom2one]

Oh we already asked the attorney. The trustee will get our returns every year. Thats fine. I just was wondering if he could go back to his regular "pay". I thought that we could not go over the 6 month prior "yearly". UGH I am confusing myself. LOL

Christine

[holding on]

mom2one, join the club! I have confused myself so many times I've lost count. For instance, my lawyer specifically told me I only need to notify the trustee when my income for the previous year rises 20%! But yet many here have already said 10%. So you end up scratching your head about the differences between the trustees. Maybe your lawyer has an example of someone who made overtime for a short period of time and then went back to normal.

[itneverends]

......Thats fine. I just was wondering if he could go back to his regular "pay". .......

Christine

Depends on what your payments are based on. If the payments were based on his pay WITHOUT overtime, going back to overtime may trigger higher payments (depending on trustee).

If you have no choice but to file using his pay INCLUDING the overtime, then it is not an issue.

Either way, you will know the income amount the payments are based on, make more than that and they may raise your payment (again, depending on trustee).

[AtWitsEnd]

I highly doubt it would be the figure used on your income schedule as that would require the trustees office to rework your schedule every year. I tend to think they compare your filed income tax returns and look for a big jump in income from that. Remember they won't have your paystubs, only your income tax return.

[itneverends]

I did not mean the net disposable income shown on the schedule, just "income" in the general sense. Your tax returns are going to be a direct correlation to whatever is on the schedule. The trustee is going to check if your "pay advices" are inline with your current tax returns when you file. If they are not, something needs to be explained, lost overtime, job change, etc.

If you make the case that your income has permanently decreased, the trustee may look at your next return to see if it has gone down compared to your last, stayed the same, or gone up. In my district, I have seen cases where the "overtime lost" argument was made and when the income taxes were filed and the trustee saw income above what was expected, he went right after it and raised payments.

In one case I saw, the trustee filed to raise the payment the full amount of the "unexpected" income. The argument that the filer's lawyer made was you should not do that without "redoing" the entire schedule. They ended up with some compromise increase that as agreeable to both sides. Point is the trustee checked to see if the income was "lost" and the payment went up when the was no drop.

The usual caveats about things vary by trustees etc. Best thing is to ask your lawyer about your particular trustee/district.

[Mom2one]

Great now I am sick to my stomach once again, this is ridiculous my husbands overtime has been cut because of the economy. THis is nuts I understand NONE Of this. Maybe we should just let the damn state take everything we own. I have had it! Maybe I should go and get a job and try to struggle to pay the damn bills off. I can't eat or sleep and just when I think we can do this I hear something else.

Christine

[chloe0724]

Mom2one,

If your pay does go up, try and be grateful, it means the economy's getting better. I know that there is always a chance that the trustee will increase your payments because of this, but you may be able to show increased expenses because of higher food and gas costs in the future. If your truly think there will be an increase next tax year, start keeping total track of all money spent. That way, if questioned, you have proof that your expneses have increased as well. Cost of living increases are never going to end both with things we buy and hopefuly with our income. I think that's why 10% is gerneraly an acceptable amount year over year.

[Mom2one]

My whole situation just feels so hopeless. Right now his work is very slow. We are on a cash only basis. And I can mpay my mortgage, taxes, meds food and utilities. Thats about it. I wonder how they would fit a payment in. We are waiting for his overtime that he had before to drop off. But it looks like we are going to be in a 13 anyway. How am I gonna get money for upkeep on the house? Cars? Cloth my son? I give up. The new attorney keeps telling me it will be ok. Whatever. I don't know.

Sorry for rambling....
Christine

[Cali]

Maybe you need to take a break from this for awhile and then come back to it. You said you aren't filing for awhile anyway. Because if you keep going at this rate, you will have more added bills because of your health.