Filing on Monday - Have Questions

[insomniac]

Hi everyone.

We met with our lawyer today and found that my income situation puts us just shy of being able to file 7 so we're going on a 13 plan that basically pays 1 cent on the dollar which will include our cars and unsecured debt.

We've delayed the filing so that we can open a new bank account as I have heard that banks can actually freeze your accounts when a filing occurs. We have a loan through this bank and it would be obviously devestating to have my assets taken right out from underneath me right now.

Before meeting with the lawyer we came up with a budget to live on, which leaves us with no disposable income (at least on paper).

My questions are:

1.) If we ever find that we have surplus in a given month can we bank that or make investments with this money? Will my checking account be subject to review by the trustee??? How much power do they have over my out-flow of money or assets? Should I be converting any unused income into cash so that it isn't visible ?? I'm lost here.

2.) I understand that we can continue to "tithe" to our local church. We had actually been very faithful at giving 10% of our gross income, however this hasn't been possible in the past six months. I want to include this in our new budget, but we're not sure if we can use our past history or if we're stuck with our last 6 months as evidence of this? How should we approach. Our Lawyer didn't have much to offer here. He hinted that adding this to a budget can possibly subject us to harsher review.

3.) What happens if we get a favorable decision on 13 and I suddenly get an increase in pay? Do I report this to my lawyer? Would this affect the amount I owe after a decision or just the % of my disposble income to payout? I understand that this may actually decrease the length of time we're in 13.

4.) My lawyer hinted that I might be able to make the payments without my company's payroll department getting involved. This would be great as I am in a senior management position and it would be highly frowned upon if this news reaches my superiors and could affect my ability to advance or even keep my job. I know there's a law here, however a company can come up with other excuses to kick one out the door without being so direct.

5.) Say that down the road we're able to free up more room in our budget and we want to provide something like piano lessons for our kids. Would this be OK? Would we be punished for this?

Thanks for all of your help!!! The more I read - the more confused / scared I become. I had no choice as I'm going in the hole $300+ each month and my family of five is surviving on slightly more than Ramen noodles. I've got to hand it to my wife - she's the queen of coupons and has done wonders with just over $60 / week for the 5 of us to eat on.

We just want to be able to breath again and provide for our children.

[rrockinggramma]

Welcome to the boards!

1. The trustee does NOT check your checking account except on filing day (balance) so have that as low as possible. Pay bills with money orders for a few weeks ahead to keep balance low. The trustee would become aware of BIG pay increases etc because you will have to submit your tax returns each year to him (and maybe refunds also). Those are reviewed by the trustee's staff and if they notice a huge amount of extra money, then they would file a motion to increase your payback.

2. I am sure that your church sends you yearly statements. So for the first 6 months of the year, you tithed. In addition you tithed in 07 and 06 etc. When I filed I had to provide the last 2 years of income tax returns. That should be proof enough that you intend to continue this contribution.

3. Increases in pay are all over the map and really depend on your trustee. Here is where your attorney is worth the price you pay him/her. A GENERAL rule of thumb is that anything over 10 percent needs to be reported. However, unless it is a HUGE increase and REALLY effects your take home pay, then I wouldn't worry about it. (My income increases about 1000 a year every year and my trustee has yet to say a word)

4. Your attorney files a Wage Order motion with the court to excuse you from payroll deduction. Done all the time.

5. Saving while in a chapter 13 in commendable and hard to do. If you buy anything, pay cash. Cash will be KING for you and your family.

GL

[NoMore]

Hey there, I am Insomniac's wife and would like to clarify on one of the questions from my husband. On #3 ~ my husband has been trying for a raise for the past 4-5 months and they keep putting it off until the beginning of the year because that is when they can analyze their data from this year. Our lawyer is filing Monday. What if he gets a raise at the end of January or the beginning of Feb. The raise he is seeking would be at least 14,200 more per year (he is underpaid for his position). With us missing all our payments this month (we are paying our trustee our first payment by Jan. 5)...what would happen? It is up in the air about the raise ~ his company has been doing alot of layoffs and shutting down offices this year, so we don't even know if he will get it, but we are really worried about this. We have been trying to wait on the raise, but we have gotten to the point that we can't make it anymore and that is why we saw the attorney and gave him the check yesterday.

[insomniac]

Thank you RG!

I've not slept but maybe a few hours total this week (hince my screen name!) due to worry and fear. We will certainly follow these suggestions. I'm sure I'll have many more questions and really appreciate your feedback. It's nice to have others out there who've been through the same ordeal who can answer these difficult questions!

[Flamingo]

Answering a few as I have to to head off to work...your life will change immensely after you file so be prepared for a huge lifestyle change, learn to accept it and after a while it won't be that bad as you get used to things.

2. We had such a loss of income prior to our filing that we had to stop donating to our church. I called our pastor and he advised me to not worry about it and when times were better for us to continue if we could. If you don't have the money to donate there, or cannot donate, don't worry about it...if it bothers you, contact a church representative or official and explain your situation. We found out the world does not end if you cannot do some things and don't have the money.

3. When you file a Chapter 13, your entire financial estate is under the control of your Trustee. Any increases or decreases in income, bonuses, inheritances, lottery winnings and also loss of income need to be reported to him. The situation here is at what percentage or amount does he take interest in this situation. It varies...while some people have to report everything, others do not. The safe bet is to check with your attorney as to what to do in your particular situation if there is a raise, bonus, job change with more money, etc. In any event, when there is any change in your monetary situation during your plan, always check with your attorney before making any personal decisions.

4. Some states require wage orders (ours does) and there is no way out. Check with your attorney.

[NoMore]

Could they say, forget it on the bankruptcy if he gets a raise, or would they just up the payment?

[Flamingo]

Could they say, forget it on the bankruptcy if he gets a raise, or would they just up the payment?

If there is a raise during your Chapter 13 Plan, that increases the amount available to your creditors. Depending on your own situation (no two situations are alike - that is why most of us stress you need to discuss with your own attorney), your Plan may be modified to increase your monthly payment. The same would apply if there was a decrease in income and your Plan payment could be lowered.

[rrockinggramma]

14000 is a big raise. However you don't have it yet and in these times, you might not get it, or at least 1 that big. So, why worry about the things you CAN'T control!!!! Let the raise thing go and deal with it when and IF it happens. You are losing sleep over something that is out of your hands anyway. And, should you get that great raise, the trustee would only increase your payments and make you modify your plan.

[NoMore]

Your right. It would be a big raise...but he is a supervisor and some of the ones under him are making more than him. LOL. That was the point of the raise. Like you said, though, it may not happen and there is no need to lose sleep over it Thanks for all of your advice!